Outstanding balance insurance may entitle you to a tax benefit in Wallonia, but no longer in Brussels. This is explained below.
Loans taken out in 2015 and 2016
In this case, your outstanding balance insurance may entitle you to a tax benefit of 45% in the framework of the housing bonus (for your own and sole home). In this case, your tax margin will amount to a maximum of €2,450 (basic amount in 2019), to be increased by €820 (the first 10 years) and €80 (if you have at least 3 children).
Loans as of 2017
The housing bonus was withdrawn and replaced by an increase of the bracket exempt from registration fees (no registration fees for the bracket between 0 and €175,000 subject to certain conditions). Outstanding balance insurance no longer entitles you to a tax benefit of any sort in this case.
For loans taken out as of 2016, the housing bonus has been replaced by the housing rebate. You may receive this tax benefit if:
- the loan (not refinancing) was taken out for a minimum of 10 years as of 2016.
- the loan was for the purchase (not renovation) of a home.
- it is your own and sole home.
- you are full owner (not only bare owner or usufructuary).
- your net taxable income does not exceed €85,911 (2019 earnings).
The tax benefit is based on income and does not exceed €1,520 per taxpayer per year. Throughout your life, you are entitled to receive the housing rebate a maximum of 20 times.
- If your net taxable income is lower than €22,273, the tax reduction will be €1,520.
- If your net taxable income is between €22,273 and €85,911, the tax benefit is therefore calculated according to a specific formula. 1,520 – ((net taxable income - 22,273) x 1.275%) = your tax benefit
Jean has a net taxable income of €26,000.
1,520 - ((26,000 - 22,273) x 1.275%) = tax benefit
1,520 - 47.52 = €1,472.48.
- If your net taxable income is higher than €85,911, you will not be entitled to a tax benefit.
Furthermore, you will be entitled to a lump sum of €125 per dependent child. Once again, this does not apply to people whose net taxable income is higher than €85,911.
Important: the amount of the housing rebate is limited to the sum of the capital and interest repayments for the year and the outstanding balance insurance premiums. Your possible tax benefit could therefore come into play in this case.
The amount of the housing rebate will also decrease by half after 10 years, which is of course quite significant.
Would you like to know more about NN's outstanding balance insurance? So, take a look here.