End of the year tip 2 – Your house and the mortgage
Pay off your mortgage
It may be a good idea to pay off extra on your mortgage before 1 January 2020 in order to reduce your assets in box 3. This means that you have to pay less tax on your assets. In addition, the interest you pay on your mortgage is higher than the interest you receive on your savings, so from a fiscal point of view, it is a good move.
It is even possible that your interest rate on your mortgage will become lower, due to the fact that your debt percentage is lower compared to the value of your house. It is interesting to check this with your mortgage advisor or bank.
But don’t just pay off your mortgage, first look at your mortgage conditions. Usually you can pay off 10% or 20% extra on your mortgage without paying a fine. If you pay off more, you have to pay a fine, because of the interest that the bank is missing.
If you have the plan to switch to another mortgage provider and your income is higher than €68.500,-, it is a good idea to switch in 2019. You usually have to pay a fine to your current bank, because of the interest they miss out. This fine is deductible for 49% in 2019, but from 2020 this will decrease to 37,1% in 2023. In 2020 the percentage is 46%.
Buy a house in 2019 and sell your house in 2020
Are you planning to buy a house and use (partial) your own money for it? Then it is wise to do this in 2019, because otherwise, you have to pay tax over your assets on 1 January 2020. This means that you have to go the notary and receive the key to your house before 2020.
On the other hand, it is wise to sell your house after 1 January 2020. Because in that case, the money you earn is not in your bank account on 1 January 2020, and therefore you do not have to pay tax on it.
Rent out your house after 1 January 2020
If you are planning to rent out your own house, it is wise to do it after 1 January 2020. If you decide to rent out your house, your house will be considered as an investment object. As a result, your house is no longer placed in box 1, but in box 3. Therefore, you have to pay tax on the value of your house minus the mortgage debt. If you do not yet rent out your house on 1 January 2020, you will not pay any tax in box 3 on your house in the first year. A good reason to wait a little while.
The TaxSavers is happy to help you with saving tax. Leave your details in our contact form or call us on +31 (0)20 -2170120.