From 1 January 2013, the 'Act on the revision of the tax treatment of the owner-occupied home' came into effect. This means that from 1 January 2013 you are no longer entitled to interest deduction on a revolving credit. If you have taken out an amount from the revolving credit that was used for the renovation or purchase of the house in which you primarily live before 1 January 2013, you are still entitled to interest deduction on that amount. Amounts withdrawn after that fall under the new legislation and are therefore no longer deductible.
A revolving credit is requested to take up all or part of the loan amount over a longer term. It offers flexibility during the renovation of your home. The interest is calculated on the outstanding balance.
A revolving credit is ideal if you have been in a renovation for a long time and want to take up a part each time. Especially when you do not know how long the renovation will take and what the exact costs are, a revolving credit offers the solution.
When you are renovating your own home, a personal loan can be more attractive from a tax point of view. The interest on a personal loan is deductible, provided it can be demonstrated that it concerns a renovation that is being done for a house in which you primarily live. Would you like more information about the interest deduction on a personal loan? Consult the tax authorities.