Sunday, February 20, 2022

First home mortgage interest deduction: how to get it?


 The deduction of interest on the first home loan is one of the tax benefits that the State recognizes to those who buy a property as their first home. In particular, this is the personal income tax deduction on interest payable which affects the financing of the purchase or renovation of the first home. This type of loan in fact provides for the recognition to the bank of interest expense calculated in the form of a percentage with respect to the capital provided by the credit institution.

The income tax deduction on the interest of the first home loan can be exercised for a cost of up to 4,000 euros, at a rate of 19%.

This means that the deduction is 19% and is calculated on a maximum expense in interest and ancillary charges of 4,000 euros: the maximum benefit will therefore correspond to 760 euros (equal to 19% of 4,000 euros). The expenses to be considered for the calculation of the deduction are the interest and accessory charges, excluding the capital portion.

This means that the deduction does not only concern the interests, but also other expenses, these ancillary charges, among which we can list the notary’s fee, registration fees, mortgage tax, cadastral tax, commissions paid to any banking intermediaries, technical appraisal costs, preliminary investigation fees and tax charges. The important element that must be remembered is that even adding all these expense items to the deductible interests, the deduction can never exceed 19% of 4,000 euros.

In order to access these tax benefits, certain requirements must be met.

Only those who have taken out the loan can enjoy the deduction. Furthermore, the property subject to the loan must be used for residential purposes and must constitute the first home: this means that the holder of the loan must not be the owner of the right of ownership, usufruct, use and habitation of another house in the same Municipality, not even in communion with the spouse, nor on another property in the national territory, for which it has already enjoyed tax benefits for the first home.

The house must then be located in the same Municipality where the beneficiary has residence or where he intends to transfer it within 18 months of purchase (this requirement serves to be certain that the beneficiary uses the house just like a first home). Finally, the property for which the interest deduction of the first home loan is requested must not be luxury.

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