Preliminary election results put homeowners’ tax break in limbo

The future of mortgage interest deduction is uncertain given the composition of the Tweede Kamer, the lower house of Dutch parliament, according to the preliminary results. While there seems to be no majority for fully abolishing the tax benefit, a revision targeting only high-income households could potentially gain support.

The mortgage interest deduction allows homeowners to deduct part of their interest payments from taxable income, collectively saving billions each year. The policy was widely discussed during the campaign, especially since the CDA, GroenLinks-PvdA, D66, ChristenUnie, and Volt all support a gradual phase-out.

The SP proposes phasing out the mortgage interest deduction for homes valued above 600,000 euros. Partij voor de Dieren sets the threshold at the national mortgage guarantee, currently 450,000 euros. DENK aims to eliminate the deduction for “ultra-wealthy owners of luxury homes,” though it has not clarified the exact definition.

These three parties could form a majority when combined with others that support reducing the mortgage interest deduction. However, they disagree on how quickly to phase it out and how to offset the resulting income loss for households.

JA21 makes no mention of the mortgage interest deduction in its party platform and states in the Stemwijzer that it “does not want to touch” the arrangement. The VVD built much of its election campaign around preserving this tax benefit for homeowners, and 50PLUS, returning to parliament, also supports keeping it.

The future of the mortgage interest deduction will ultimately depend on the upcoming coalition talks. Political trade-offs could result in minority positions receiving backing from the full coalition.