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Mortgage interest deduction topic of discussion for years

Mortgage interest deduction is a Dutch tax regulation that allows homeowners to deduct their mortgage interest payments from income tax. It was originally introduced to compensate homeowners for the eigenwoningforfait (imputed rental value). For years, many economists have argued that mortgage interest deduction should be abolished, as it distorts the market by driving up house prices and creating inequality between buyers and renters.

Political reasoning questioned

The Christian Democratic Appeal (CDA) argues that abolishing the relief would improve the position of first-time buyers, but Korevaar raised doubts about this in an interview with the daily newspaper NRC. Abolishing the scheme would deprive first-time buyers of their main financial advantage, without automatically leading to more affordable homes. Speaking on , Korevaar noted that because of high house prices and rising interest rates, first-time buyers often take out large loans. This means that they now deduct relatively high amounts of mortgage interest. ‘It is precisely first-time buyers with average incomes who benefit relatively strongly from this scheme.’

An alternative: increasing the imputed rental value 

Housing market economist Korevaar therefore advocates a different approach. ‘The current level of the imputed rental value is no longer in proportion to the real value of the rental savings homeowners enjoy.’ Instead of abolishing mortgage interest deduction altogether, the imputed rental value could be increased. The imputed rental value is a percentage of the property’s assessed value, which is added to the homeowner’s taxable income. Every homeowner pays this, whereas mortgage interest relief varies depending on individual circumstances. In this way, the benefit for first-time buyers would be preserved, while households who already deduct little interest would shoulder a larger part of the bill.

No silver bullet for the housing shortage

Korevaar stresses that scaling back mortgage interest deduction is in any case not the solution to the housing shortage. What is needed above all are major investments in new housing construction. He believes the current debate on mortgage interest relief must be placed in a broader context, where the housing market problems faced by first-time buyers are a significant dilemma. 

According to tax experts, abolishing mortgage interest deduction is pointless

Tax specialists, including Professor Peter Kavelaars of Erasmus School of Economics, have raised serious concerns about political plans to abolish mortgage interest deduction. In Kavelaars view, it is illogical to end the deduction for owner-occupied housing while interest on consumer loans and second homes remains deductible in box 3. ‘That is the world turned upside down,’ says Kavelaars.

In the Dutch newspaper Het Financieele Dagblad of 12 September 2025, he points out that this discrepancy leads to a skewed and difficult-to-explain tax system, in which homeowners are disadvantaged compared to people borrowing for a car or a second home. Kavelaars, who in the past advocated scrapping mortgage interest deduction, stresses that the debate risks becoming outdated as long as politicians fail to recognise the loophole into box 3.