The tax consequences of a loan

Sometimes taking out a loan has consequences for your tax assessment. So it may happen that you have to pay less tax in box three; a loan is a debt and debts reduce the value of your equity. If you have a lot of equity (savings, investments, shares) then you have to pay tax if you exceed a certain limit. If you have more equity than € 21,000 (or € 42,000 together with your partner), you have to pay tax on the part of your assets that exceeds the threshold: the so-called wealth tax. However, you may deduct any debt from your assets, which means that a loan can ensure that you end up below the tax threshold or that you have less than the limit.

Calculation example: You have shares worth € 30,000 and a debt ( personal loan or revolving credit ) of 8,000, which you did not spend on the sale, improvement or maintenance of your home, but for example on a car or a holiday. This debt exceeds the so-called debt threshold. This is € 3,000 for single people and € 6,000 for tax partners. Only when the (joint) debt exceeds this threshold can you deduct them from the tax. In box three you would have to pay € 9,000 tax: your capital of € 30,000 – € 21,000 exemption. But you still have a debt of € 8,000. First you have to deduct another debt threshold of € 3,000. Then you still have € 5,000 left. You may deduct this amount from your assets: € 30,000 – € 5,000 is € 25,000. If you deduct the exemption of € 21,000 from this, then you still only have to pay € 4,000 tax instead of € 9,000 if you had no debt.

Subtract interest in box one

Sometimes you can deduct the interest from a personal loan via the mortgage interest deduction scheme. That is not always possible, only if you have taken out the loan for the purchase, maintenance or improvement of your home. In addition, the loan must be repaid annuity in a maximum of thirty years (ie with a monthly fixed repayment amount). So if you have taken out a personal loan that meets the conditions, the loan does not fall in box three, but in box one. This is the box for taxable income from work and home. You can then deduct the interest from that loan from your taxable income. Before you take out a personal loan, it is wise to find out whether that is the most advantageous for you. Perhaps it is more sensible to raise the mortgage because that interest is often lower. On the other hand, when raising a mortgage, there are many extra costs, so you will have to calculate to see what ultimately costs you the least.