Half of benefits from mortgage tax relief go to richest households

Nearly half of the 7.2 million households in the Netherlands had a mortgage on their home in 2008. Together, they paid 28 billion euro in mortgage costs, and received more than 10 billion euro back from the government by through tax deductions. Nearly half of this 10 billion euro was paid to the 20 percent of households with the highest incomes.

Average tax relief 240 euro per month 

Four million households in the Netherlands had an own home in 2008. Nearly 3.5 million of them had a mortgage on their home. They paid an average 680 euro per month for their mortgage. On average they received 240 back through mortgage interest relief, by deducting their mortgage interest payments from their income tax and social insurance liabilities.

The higher the mortgage costs, the larger the tax benefit

One percent of households had very high mortgage costs: 2,700 euro or more per month. They received 44 percent of this amount back in the form of tax relief: 1,620 euro per month on average. For the quarter of mortgage payers with the lowest costs (less than 330 euro per month) the tax benefit amounted to about 20 percent, or 40 euro per month.

Mortgage tax relief by amount of mortgage costs, 2008

Higher incomes more likely to have a mortgage and receive most tax relief

Eight out of ten households with a gross income of 106 thousand euro or more had a mortgage. They received nearly 42 percent of the costs back, an average of just over one thousand euro per month. 

Only one in ten households with a gross income of less than 16 thousand euro had a mortgage. They paid an average 620 euro, and received 90 euro in tax relief. This is connected with the lower tax rates for this income group.

Mortgage tax relief by income group, 2008

Most tax relief to richest households

As a result of the relatively large number of households with a mortgage and the high average tax deductions, 30 percent of total mortgage tax relief  was received by the highest income group. Just over 19 percent was paid to the second highest income group. This means that nearly half of mortgage tax relief is received by households with a gross income of more than 81 thousand euro.

Share of total mortgage tax relief by income group, 2008

Reinder Lok and Peter Meuwissen