Borrowings spent on owner-occupied home

Loans taken out in aid of the acquisition, maintenance or improvement of owner-occupied homes are regarded as home acquisition debts, the interest paid on which can be used for income tax relief.

In order for a loan to be accepted as a home acquisition debt, it is essential that the home owner in question should render it plausible – by producing invoices and proof of payment – that he or she has indeed spent the borrowings on his or her own home, on pain of the interest on the loan being denied as a tax credit.

The issue at stake in proceedings brought before the Arnhem-Leeuwarden District Court was whether certain loans having been contracted several years after the dwelling in question had been acquired should or should not qualify as home acquisition debts. Maintenance and improvement work had been carried out on the property some significant time before the loans had been taken out. The home owner had no proof bearing out how the borrowings had been spent, in addition to which one of the loans, in fact, had been taken out by his parents rather than by him. The Court dismissed the suggestion that the loans should be regarded as home acquisition debts, which in turn disqualified the interest on the loans for income tax deduction purposes.

Dutch version: Besteding geleend geld aan eigen woning