If you want to make maximum use of the options for limiting your tax invoice, you can now fully combine the tax benefits of a loan for your homeowner with the tax reduction for long-term savings.
Until recently, the tax benefits of a home loan and that of long-term savings were still in a common pot, for which a maximum applied. Those who were still paying off a credit, therefore, received little tax benefit from their long-term savings.
This has been different since 2016 and you can fully enjoy both the tax benefits of long-term savings and the tax reduction for the loan for the house or apartment that you occupy yourself. That also makes sense. As a result of the state reform, the tax benefits for housing loans have become a regional competence, while the tax reduction for long-term savings has remained a federal competence.
Long term saving
With long-term saving, you provide extra capital by the time you reach retirement age. This is done through a tak21 savings insurance. This offers you a guaranteed minimum interest rate, which can be supplemented annually with a profit sharing if the financial markets and the results of the insurer allow this.
The amount that you can deposit annually depends on your income. There is a maximum of 2,350 euros for 2019. You will receive a tax reduction of 30 percent on the amounts deposited.
Anyone who takes out a mortgage loan in Flanders for the purchase or construction of the property where he actually lives, receives a tax reduction of 40 percent of the amount he pays for repayment of the capital, interest and premiums for the outstanding balance insurance. There is, however, a global maximum of 1,520 euros. In the first ten years of the loan, that maximum is increased by 760 euros if the home in which the taxpayer lives is also his only home. And an additional 80 euros can be added if the applicant had at least three dependent children when taking out his loan. The total tax reduction can thus amount to 40 percent x (1,520 euros + 760 euros + 80 euros) or 944 euros + saved municipal taxes. The benefit applies per person. Two people who have a loan together, so fully enjoy the tax reduction.
In the Walloon region, the Check Habitat offers a tax advantage for those who took out a mortgage for their home where they have their domicile.
In addition to these amounts, a fixed sum of 125 euros per dependent child is distributed between the two parents. The arrangement applies for the first ten years. The tax benefits will be halved in the next ten years. After twenty years there is no longer any tax benefit.
The deduction can also not be higher than the amount that was repaid in capital and interest plus the life insurance premium.
Income above 85,910 euros is not eligible for a tax reduction. The situation is reviewed annually.
Loans taken out before the end of 2015 still fall into a common pot. Those who still pay off a loan from that period will therefore have little or no room for an additional tax benefit for long-term savings.
Another thing: since 2017, there is no longer any tax advantage in the Brussels-Capital Region for taking out a mortgage on a residential loan. It was replaced by a direct reduction in registration fees for those who meet the conditions.