Banks come up with their own mortgage tax relief plan

The Netherlands’ two biggest mortgage providers have come up with their own plans to phase out mortgage tax relief, the Financieele Dagblad reports on Tuesday, quoting banking sources.

The paper says both ING and Rabobank have drawn up their own plans to gradually cut back on the tax break and handed them over to the banking association NVB.
NVB chairman Boele Staal said on Monday the organisation wants to talk about ‘necessary reforms’ to the housing market without ‘taboos and blockades’. He was speaking at a New Year drinks party for the sector.
The banks say uncertainty about the tax break on mortgage interest payments is one of the main reasons why houses are not selling at the moment.
Earlier this month central bank president Klaas Knot said home owners should be able to borrow no more than 90% of the value of their house. At the moment people can borrow 106% of the value of their homes but a gradual reduction to 90% would ‘bring stability’ to the housing market, Knot said.
In November, the central bank called on the government to limit the tax breaks for mortgage holders, saying the current system is damaging the country’s financial stability.
The Dutch system is one of the most generous in Europe – home owners can fully deduct all the interest from tax for 30 years – and the current government has pledged to leave it untouched.
The Rabobank plan envisages tax relief being restricted to mortgages which involve paying off the loan, while ING proposes stopping the tax break overnight – in 30 years time.
Staal said he did not have a preference for either option. ‘No-one believes mortgage tax relief will be left alone by the next government,’ he said.
The current cabinet has committed itself to making no changes, and Geert Wilders, whose anti-Islam party props up the government, says he will go for an election if ministers change their mind.

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