Interest deductions for loans and mortgages

Quick answer: The interest deduction means that you can pay less in tax if you pay interest through certain types of loans, such as mortgages or mortgages.

Interest deductions for loans and mortgages

Interest deductions for loans and mortgages

Throughout life, most Danes at some point experience a need to take out a loan. It can be loans for many different things. For example, home loans, car loans, boat loans or just a quick loan.

When you take out a loan, interest is automatically included in the loan. An interest is a fee that you have to pay to be allowed to take out the loan. In other words, an interest rate is an additional expense that comes with borrowing money.

What exactly is an interest deduction?

An interest deduction is a type of deduction that allows you to pay less in taxes when you pay interest through, for example, housing or mortgage loans. This does not apply if you have taken out a mobile loan, a quick loan or an SMS loan fast payment. SKAT automatically calculates interest expenses in one’s annual statement, so you do not have to go in and actively register that you pay interest on a loan.

What is the idea of ​​an interest deduction?

The original idea of ​​the interest deduction is that it should act as a form of security for homeowners. It does so, since the interest deduction is stated in a adjusted percentage, which is to ensure that the homeowners are covered by part of their interest expenses. However, the deduction is available to others a homeowner, and you are also entitled to a deduction on loans through private financial institutions.

An interest deduction is fully automatically included for example. home loans, mortgages, bank loans and consumer loans with finance companies.

The subject of interest deductions is something that our politicians often debate and find it difficult to reach an agreement.

With the current government at the forefront and based on the government’s new 2025 plan, it looks like the interest deduction will continue to fall. The plan is for the interest deduction to fall by about 1% every year until the year 2025.

How much is my interest deduction?

How much is my interest deduction?

At present, the interest deduction is 33.6% for under 50,000 dollars and 27.6% for over 50,000 dollars. This does not matter whether you pay top tax or not.

Table of percentages for interest deductions for single people with an income of more than USD 50,000.

A gradual reduction of the interest deduction is a key part of the government’s proposal for a future tax reform.

As the Spring Package 2.0 will expire, the 2025 plan will take its place. The 2025 plan therefore continues in the tracks that “Spring Package 2.0” has laid. If you want to know more about the comprehensive 2025 plan, you can find the full publication on the Ministry of Finance website.