An individual's own home was financed with an interest-only mortgage that already existed on 31 December 2012. From 1 January 2013, the so-called repayment requirement was introduced for new loans as a condition for interest deduction, but a transitional rule says it does not apply to pre-existing loans. Several years later, the individual still processed his existing mortgage as a debt in Box 3 because it was more favourable to him. Is this possible?
The court recently ruled on this case. The court found that the loan was taken out in connection with the acquisition of the owner-occupied home before the year 2013. As a result, under the transitional rule, the loan must be treated as an owner-occupied home debt in box 1, even though treatment as a debt in box 3 would be more favourable. The tax legislator's wide discretion has not been exceeded with its choice to limit the prescribed application of the owner-occupied home debt regime in force on 31 December 2012 to owner-occupied home debts existing on that date.
Note: The transitional law for owner-occupied housing loans existing on 31 December 2012 is therefore mandatory.
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