The mortgage deduction lets you subtract the mortgage interest you paid over a year from your gross annual income. Your taxable income drops, so you pay less income tax. What you actually get back is a percentage of that interest, which is less than the full amount.

When you compare mortgage offers, that difference matters. You compare net monthly costs, and the deduction is the bridge between gross and net, whether you are buying your first home or remortgaging. Below we walk you through the calculation, the loans that qualify, how long relief lasts and what changes when you adjust your mortgage.

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How the deduction lowers your taxable income

Every year you file an income tax return. On it, you list the mortgage interest you paid on the loan for your own home. That interest is subtracted from your income in Box 1, which means a lower taxable income and a lower tax bill.

There is a second item on your return. The eigenwoningforfait, or notional rental value, is a small percentage of the WOZ value of your home. You add it to your income. It works like a modest tax on owning the house you live in, and it reduces the net benefit of your interest deduction.

The basic formula has three parts. You take your gross income, subtract the interest you paid and add the eigenwoningforfait. The result is your taxable income in Box 1, and the tax you no longer owe on the difference is your benefit.

That benefit depends on your tax bracket. The tax office does not refund the whole interest amount. The tax benefit is calculated at the applicable mortgage-interest deduction rate rather than automatically at your highest bracket rate, and the final refund can also be affected by tax credits.

Your employer usually withholds wage tax as if you had no home or mortgage. That is why the benefit arrives as a refund, and why your payslip does not change when you buy a house or remortgage. You can change the timing of that refund, as the section on net monthly costs explains.

What you actually get back, worked out in euros

Take a €400,000 mortgage on a home with a WOZ value of €400,000, an interest rate of 3.8% and a gross income of €75,000 a year. The annual interest is €400,000 × 3.8%, which comes to €15,200.

For 2026, the eigenwoningforfait for most owner-occupied homes is 0.35% of the WOZ value. In this case that is €400,000 × 0.35% = €1,400. Homes with a WOZ value above €1,350,000 follow a different calculation: €4,725 plus 2.35% of the value above that threshold.

Your taxable income then becomes €75,000 − €15,200 + €1,400 = €61,200. The income on which your employer withheld too much tax is €75,000 − €61,200 = €13,800. That €13,800 is your net deductible amount in this simplified example.

Next you apply your bracket rate. These are the 2026 Box 1 rates for people below AOW age:

Tax bracket (2026)	Taxable income in Box 1	Rate
1	up to €38,883	35.75%
2	€38,883 to €78,426	37.56%
3	above €78,426	49.50%

A taxable income of €61,200 falls in bracket 2. The refund is €13,800 × 37.56% = €5,183.28 for the year. That is what the deduction is worth to you in this simplified example.

Step	Calculation	Result
Annual mortgage interest	€400,000 × 3.8%	€15,200
Eigenwoningforfait (2026)	€400,000 × 0.35%	€1,400
Taxable income	€75,000 − €15,200 + €1,400	€61,200
Net deductible amount	€75,000 − €61,200	€13,800
Refund at bracket 2	€13,800 × 37.56%	€5,183.28

Rates and thresholds change each year, so check the current figures before you rely on them. If you have a tax partner, you can choose how to divide certain deductible items between you, depending on your situation.

Which loans qualify for tax relief

Relief is tied to what you use the money for. The loan has to finance the purchase of your owner-occupied home, the refurbishment or maintenance of that home, or the buy-out of a long-term ground lease. Money you borrow against the house for a car or a holiday falls outside the deduction.

The house has to be the home you live in. If you rent it out, you cannot deduct the interest for the letting period.

For loans taken out on or after 1 January 2013, there is a repayment condition too. According to the Tax Administration, you must repay the loan on a straight-line or annuity basis within 30 years. For these loans, the loan agreement must require repayment at least according to an annuity schedule within 30 years.

There are also rules for the period around a move. If you move into a new house within 3 years after the tax year and it stands empty until then, you may already deduct interest. After you move out, you can keep deducting interest on the old house while it is vacant and for sale, for the year it becomes vacant and the 3 years after. Renting it out during that period pauses the deduction for the letting months.

If you are remortgaging, pull out your current agreement and check the repayment schedule. It shows which conditions your existing loan already meets, and therefore what a new offer has to match.

The 30-year limit and when it starts

You can claim mortgage interest relief for a maximum of 30 years. That clock starts the moment you take out your mortgage or loan. For mortgages that already existed before 1 January 2001, the 30-year period started on 1 January 2001.

Two rules often get mixed up here. The first is the 30-year deduction period itself. The second, for loans from 2013 onward, is the obligation to repay the loan within that same term. They line up, but they are separate requirements, and post-2013 loans need both.

Increasing your mortgage adds a twist. For the original loan, the existing 30 years keep running. For the extra amount, a new 30-year period starts, and that part must also meet the current conditions on use and on straight-line or annuity repayment.

Say you took out a loan in 2015 and later borrow extra to renovate the kitchen. The 2015 loan keeps its original end date. The renovation part gets its own 30-year term, starting when it was added. You can end up with loan parts that each have a different end date.

When you remortgage, ask for an overview of your loan parts with their start dates. It shows how many deductible years each part still has, and helps you judge whether a longer fixed rate period fits within the time you have left.

Annuity or linear repayment and your deduction

Both repayment types qualify. They do spread your interest, and therefore your deduction, differently over time.

With an annuity mortgage, your gross monthly payment stays the same while the rate is fixed. In the early years most of that payment is interest, so you pay more interest than with a linear mortgage. That sounds like a drawback, but more interest also means a larger deduction on your return.

As the years pass, the balance shifts. You repay more and pay less interest, so your deduction gets smaller. Your gross payment stays flat while your refund shrinks, which means your net monthly costs rise gradually over the life of an annuity mortgage.

A linear mortgage works the other way round. You repay the same amount of principal each month, so your debt falls faster. Interest and the deduction both drop from the start, and gross payments start higher and come down steadily.

Neither option wins by default. An annuity gives you lower net costs early on and a higher deduction, which helps when your budget is tight. A linear mortgage costs more at the start but lowers your debt and total interest faster. When you compare remortgage offers, look at the net costs per year across the term as well as the first monthly payment.

Older mortgages and the transitional rules

Mortgages taken out before 1 January 2013 fall under transitional law, known as overgangsrecht. You are not obliged to repay those loans in full to keep the deduction, and that includes interest-only mortgages from before that date.

Interest-only mortgages are deductible only under those transitional rules. If you take out a new interest-only loan today for borrowing that is not protected by the transitional rules, the interest on that part is not deductible.

The rules get specific when you increase an old loan. Your original interest-only part keeps its deduction under the old conditions, because the transitional law still covers it. The transitional law does not apply to the new part, so that part has to meet the current rules for an increase.

If you’re remortgaging an older loan, check this point carefully. How your existing loan parts are treated after a switch depends on how the new loan is set up. Ask for written confirmation that your old parts keep their status, and make sure any extra borrowing is set up as a separate part that meets the current rules.

Turning the refund into net monthly costs

Your net monthly cost is your gross monthly payment minus the tax refund from the deduction. The gross payment is interest plus repayment, and the refund is what the tax office returns on that interest.

In the earlier example, the annual refund is €5,183.28. Spread over twelve months, that amount comes off your gross monthly costs. Your own gross payment comes from your offer, so the net figure differs for every mortgage.

By default, you receive the refund once a year after you file your return. You can switch to monthly payments through a voorlopige teruggaaf, or provisional tax refund. You apply for it with the Tax Administration for the current or coming year, and the refund then arrives every month.

For budgeting, the monthly route keeps your cash flow steady. The refund does move when your interest changes. After you remortgage at a different rate, update your provisional refund to match your new interest, so you avoid a large difference to settle at the final assessment.

When you compare two remortgage offers, run this calculation for each. A lower rate means lower interest and a smaller refund, yet your net cost still ends up lower. Only the net figures show the true difference between the offers.

Second homes, switching lenders and a shrinking rate

Relief applies to the loan for your owner-occupied home. A second property you do not live in is not an owner-occupied home, and if you rent a house out, you cannot deduct the interest for that period. How the tax rules treat that second property is worth checking separately.

The deduction is set by the tax rules and linked to the loan for your home, not to the lender. When you switch providers, the conditions on use and repayment still apply, and an increase starts a new 30-year period for the extra amount. Whether costs such as advice, valuation or notary fees are deductible depends on the current rules, so check each cost before you count on it.

The rate at which you can deduct interest can change over time, and that matters most if your income sits in a higher bracket.

Read also: How expats can get a mortgage in the Netherlands.

Conclusion

The mortgage deduction can reduce your Box 1 tax at the applicable deduction rate on qualifying interest, after accounting for the eigenwoningforfait, for up to 30 years per loan part. For a remortgage, a useful next step is to list your loan parts with their start dates and work out the net monthly cost of each offer.

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