What are deductible expenses when buying a home?
When you buy a home, you incur expenses. Some of these costs can be deducted on your tax return. These are deductible expenses: costs you are allowed to report to the IRS because they are directly related to taking out a mortgage. The advantage? By deducting these expenses, you pay less tax and end up keeping more money. This applies to both one-time deductible expenses and recurring expenses specifically related to your mortgage.
Deductible expenses apply specifically to the mortgage and financing of your own home. This means that not all costs surrounding the purchase of a home are deductible. For example, the costs you incur in signing a preliminary purchase agreement or a preliminary purchase contract are not deductible. These documents regulate the arrangements for the purchase, but have no direct relationship to the mortgage or financing. Which costs are deductible, we explain later in this article. We also show you how you can easily process these costs in your income tax return. In this way you can ensure that you do not miss out on any tax benefits and that you can take full advantage of the benefits for your own home.
What expenses are deductible when purchasing a home?
Buying a home involves a variety of costs. Fortunately, you can deduct some of these costs on your tax return. Below is an overview of the expenses you can deduct when purchasing a home. This overview will help you understand exactly what expenses you can include in your tax return:
- Notary fees mortgage
- Advisory and brokerage fees mortgage
- Appraisal fees
- National Mortgage Guarantee(NHG) fees
- Mortgage interest deduction
- Bank guarantee fees
- Bereavement commission
- Leasehold canon
- Registration of mortgage deed in Land Registry
- Mortgage closing costs
1. Notary fees for mortgage deed deductible.
The fees you pay to the notary to prepare the mortgage deed are deductible expenses. This document is required to officially record your mortgage.
Please note that notary fees for the purchase deed, which regulate the transfer of ownership, are NOT deductible. This is because they are not directly related to the financing or costs for the mortgage deed.
2. Consulting and brokerage fees for mortgage deductible
Did you use a mortgage broker or intermediary to close your mortgage? The costs you pay for this are covered by deductible expenses. This applies even if these costs are part of a package deal with your mortgage lender. Make sure you keep the invoice for your income tax return.
3. Appraisal fees deductible
If an appraisal is required to obtain a mortgage, you can deduct this cost. The appraisal report helps the lender determine the value of your own home. Appraisal fees for other purposes, such as purchasing advice, are not deductible.
4. National Mortgage Guarantee fees deductible
Do you opt for a mortgage with NHG? Then you pay one-time costs, such as the NHG premium, which are deductible on your tax return. These are costs you incur only once when you take out your mortgage. You may deduct the amount on your tax return because it is directly related to taking out the mortgage. NHG can additionally help you pay a lower mortgage interest rate.
5. Mortgage interest deduction deductible
One of the best-known deductions is the interest you pay on your mortgage loan. You can deduct this mortgage interest annually on your tax return. This only applies to your own home (your primary residence). If you pay interest for a second home or a vacation home, it is not deductible.
6. Bank guarantee fees deductible
A bank guarantee is often used to cover the deposit when buying a house. The costs you incur for this are deductible expenses because they are directly related to financing the home.
7. Bereavement commission deductible
If you want to extend the validity of your mortgage offer, you will pay additional fees for this. This so-called preparation fee is deductible on your tax return, as long as it is a mortgage for your own home.
8. Periodic ground lease rent deductible
Do you live on leasehold land and pay annual ground rent? If so, these payments are deductible expenses on your income tax return. Leasehold is seen as a cost for the use of your property. Please note: a one-time lump sum for ground rent is not deductible, because it is not periodic.
9. Cost of mortgage deed in Land Registry deductible
When you take out a mortgage, the mortgage deed must be registered at the Land Registry. This is a mandatory administrative step to officially record the financing of your home. The costs you incur for this are covered by deductible expenses. Keep your invoice well, so you can easily include these costs in your income tax return.
10. Mortgage closing costs deductible
The closing costs you pay to the bank for providing a mortgage are deductible expenses. These are one-time costs that are part of financing your own home. By reporting these costs on your tax return, you can get a tax benefit. This could end up saving you hundreds of dollars.
By reporting the right expenses on your tax return, you can save a lot. Deductible expenses such as mortgage interest, mortgage deed costs and NHG premiums mean you pay less tax and have more money left over.
What expenses are not deductible home purchase?
When purchasing a home, you incur expenses, but unfortunately not everything is tax deductible. It is important to know which costs you may not deduct on your income tax return. This prevents mistakes and you know exactly where you stand. Below is a complete list of costs that are not deductible:
- Brokerage fees
- Transfer tax
- Notary fees for the bill of sale
- Appraisal fees for other purposes
- Cost of a building inspection
- Moving and furnishing expenses
- Maintenance and improvement costs
- Leasehold redemption fee
- Cost of term life insurance
- Brokerage commission when selling your home
Below we explain why each expense is not deductible.
1. Brokerage fees
The fees you pay to a buying agent or selling agent are not deductible. This is because these costs have no direct relationship to the mortgage or financing of your home. Brokerage fees fall under brokerage fees and are considered private expenses by the Internal Revenue Service.
2. Transfer tax
When purchasing a home, you pay transfer tax on the purchase price. Although this is often a large expense, these costs are not tax deductible. The Internal Revenue Service considers transfer tax a mandatory tax that has nothing to do with the mortgage or deductible costs of owning a home.
3. Notary fees for the bill of sale
The notary fees you pay for preparing the deed of purchase are not deductible. These costs are only for the transfer of ownership and not for financing. Only notary fees for the mortgage deed are considered deductible expenses.
4. Appraisal fees for other purposes
Appraisal fees are deductible only if they are necessary to obtain a mortgage. This also applies to other loan costs, such as brokerage fees incurred specifically to secure your mortgage. Are you having an appraisal report done to determine market value or for purchase advice? Then these costs are not deductible. Other buyer's fees, such as these appraisals, are also not deductible for your own home.
5. Cost of a building inspection
The cost of a structural inspection is not deductible. These inspections are often performed to check the technical condition of a home, but they are not directly related to your mortgage. As a result, these costs are considered private expenses.
6. Moving and furnishing expenses.
Expenses you incur to move or furnish your home, such as painting or laying new flooring, are not deductible. These expenses are considered by the Internal Revenue Service to be private expenditures and are therefore not tax deductible.
7. Maintenance and improvement costs
Maintenance and improvement costs on your home, such as replacing a kitchen or painting the exterior, are not deductible. Even if you incur these costs immediately after purchasing your home, they are not considered expenses for financing purposes.
8. Leasehold redemption fee
A one-time redemption payment to buy off ground rent for a longer period is not deductible. Only periodic payments of ground rent are covered by deductible costs of owning a home.
9. Cost of term life insurance
If you purchase term life insurance in conjunction with your mortgage, you cannot deduct the premium for it. This insurance is often required by banks, but its cost is not recognized by the Internal Revenue Service as a deductible mortgage-related expense.
10. Brokerage commission when selling your home.
If you sell a home and pay brokerage commission for it, these costs are not deductible. This is true even if the proceeds from the sale are used to purchase a new home.
Why are these expenses not deductible?
The Internal Revenue Service considers only expenses directly related to the mortgage or financing of your home as deductible. Other costs, such as maintenance, furnishings or brokerage services, are considered private expenses. This means they are not tax deductible.
Avoid mistakes on your tax return
Are you sure you entered all deductible expenses correctly on your income tax return? Knowing which expenses are not deductible will help you avoid mistakes and ensure you don't miss out on a tax benefit. Check your expenses carefully and consult a tax advisor when in doubt. This way you will make the most of your tax benefit.
How do you deduct these expenses on your tax return?
Deducting expenses on your tax return may seem complicated, but it's simpler than you think. With the right preparation, you can save big. Here's a step-by-step guide on how to correctly fill out deductible home purchase expenses and what to look out for.
1. Fill in the correct section on your tax return
When completing your tax return, you enter deductible expenses in the mortgages and loans section. This is part of Box 1, in which you include your income, deductions and expenses for your own home. You can enter the following deductible expenses here, among others:
- Mortgage Interest
- Notary fees for the mortgage deed
- Mortgage appraisal fees
- National Mortgage Guarantee (NHG) fees.
Check carefully that you only enter expenses that are truly deductible. Some expenses, such as realtor fees or maintenance costs, are not included and therefore you may not deduct them. Also remember that you may only report expenses that you actually paid and that are directly related to your mortgage or owner-occupied home.
2. Keep all invoices and supporting documents
The IRS may ask you for supporting documents for the expenses you have reported. Therefore, make sure you keep all invoices, such as those from the notary, the appraiser and your mortgage advisor. With these documents you can prove that the expenses were actually incurred and comply with the rules for deductible costs of owning a home.
Tip: Create a separate folder (digital or physical) to keep all your invoices, receipts and copies organized. Also consider supporting documents for one-time deductible expenses, such as the cost of the mortgage deed or NHG. That way you have everything right at hand when you file your tax return.
3. Be careful about non-deductible expenses
It is important not to report non-deductible expenses on your tax return. This is because it can lead to corrections or even penalties. For example, avoid entering:
- Cost of buyer
- Moving and furnishing expenses
- Other expenses that are not tax deductible.
Make sure you only deduct expenses that comply with IRS rules. In doubt? Review the overview in the previous section of this article to make sure you don't make mistakes when filling out your income tax return.
4. Need help? Ask a consultant for advice
Can't figure it out or in doubt about what expenses you are allowed to deduct? Then it is smart to get help from a tax advisor. They can tell you exactly how to fill out your tax return correctly and how to take full advantage of tax benefits. Think for example about the mortgage interest deduction and other deductible expenses for your own home.
Example tax benefit deductible expenses
By smartly declaring deductible expenses when you buy a home, you can save quite a bit. But exactly how much does it save? Below is a concrete calculation example to show how much tax advantage you can gain.
Practical calculation example of deductible expenses
Suppose you bought a home and incurred the following deductible expenses for it:
- Notary fees for the mortgage deed: €1500
- Consulting and brokerage fees for the mortgage: €2000
- Mortgage appraisal fee: €600
- Cost for National Mortgage Guarantee (NHG): €2500
In total, you incurred €6600 in deductible expenses. You report these expenses on your income tax return in the mortgages and loans section. Be sure to keep all invoices so you can prove that these expenses were actually paid.
How is your tax benefit calculated?
The tax benefit depends on your income and the corresponding tax rate. In this example, we assume a the 2025 rate of 37.48% (the rate for an income up to about €76,000 in 2025). The calculation looks like this:
- Total deductible expenses: €6600
- Tax rate: 37,48%
- Tax benefit: €6600 x 37.48% = €2440.02
By properly itemizing these deductible expenses, you will get over €2400 back from the IRS. This is a substantial savings on the total cost of your home.
Please note that this benefit applies only to costs that meet the conditions of the Tax Office, such as notary fees for the mortgage deed and National Mortgage Guarantee fees.
Frequently asked questions about deductible expenses
Buying a home involves several questions, especially when it comes to deductible expenses and tax benefits. What exactly are you allowed to deduct? What rules apply? And how do you make sure you don't overlook anything?
To get you started, we have listed the most frequently asked questions about deductible expenses for you. From one-off expenses to mortgage interest deduction and the use of the WOZ value: here you will find clear answers and useful tips to make your tax return easier.
Keep reading and find out how to take full advantage of the tax benefits surrounding the purchase of your home!
What are one-time deductible home purchase expenses
One-time deductible expenses are costs you incur only once when taking out a mortgage or buying a home. You can deduct these expenses on your tax return. Examples of one-time deductible expenses are:
- Notary fees for the mortgage deed (but not for the purchase deed)
- Mortgage appraisal fees
- National Mortgage Guarantee (NHG) fees.
- Consulting and brokerage fees for the mortgage
Can I deduct the cost of copper on my tax return?
No, buyer's fees are not deductible on your tax return. This is because these costs are not directly related to financing your home. Buyer's costs include, for example:
- Transfer tax
- Notary fees for the bill of sale
- Brokerage fees
Although buyer's fees are often a large expense, they are considered non-deductible expenses by the Internal Revenue Service. Only expenses directly related to your mortgage or financing, such as notary fees for the mortgage deed, are deductible.
Will mortgage interest deductions still be possible in 2025?
Yes, in 2025 you can still deduct mortgage interest on your tax return. This only applies to the interest you pay on your mortgage loan for your own home in which you live as your primary residence. Mortgage interest for a second home or a vacation home is not deductible.
Keep in mind that the maximum tax rate at which you may deduct mortgage interest decreases every year. In 2025, this rate will be a maximum of 37.48%. When you file your income tax return, check carefully how much benefit this will give you.
Can I use the WOZ value of my property on my tax return?
Yes, the WOZ value of your home plays an important role in your tax return. This value is used to calculate the owner-occupied home lump sum. The condominium tax credit is an amount you must add to your income for owning your own home.
In 2025, the owner-occupied home lump sum is usually 0.35% of the WOZ value. depending on the value of your home. Check the WOZ value assigned to your home by the municipality and use it to fill out your tax return correctly.
What should I do if I took out a loan for my home?
Have you taken out an additional loan for your home, such as for a remodel? Then you can deduct some of its costs. This only applies if the loan was used to improve or maintain your own home, such as:
- Installing a new kitchen
- Installing solar panels
- Building a dormer
You can deduct the interest you pay on this loan on your tax return, provided you comply with the IRS rules. Tip: Keep all supporting documents, such as invoices and the loan terms. This way you can prove that the loan was taken out for housing-related expenses.
Are cadastral fees deductible when buying a house?
No, cadastral fees are not deductible when buying a property. These are administrative costs you pay for registering the transfer of ownership at the Land Registry. Because these costs are not directly related to the mortgage or financing, they are not eligible for tax deduction.
What are the rules for deductible expenses with an ex-partner?
If you share a home with an ex-partner, there are special rules for deducting expenses. For example, you can continue to deduct the interest on the mortgage as long as the home is still considered your own. This may be the case if one of you continues to live in the home and the other lives elsewhere.
Note: You may only deduct the expenses that belong to your share of the mortgage. Therefore, you cannot deduct your ex-partner's expenses. Make sure you make clear agreements about this and check who paid which expenses.
How does the owner-occupied home lump sum work and what do I have to pay?
The owner-occupied home lump sum is an amount you must add to your income if you own your own home. The IRS sees this as a type of "housing benefit" that is added to your income.
In 2025, the owner-occupied home lump sum is usually 0.35% of the WOZ value of your home. Suppose the WOZ value of your home is €300,000, the owner-occupied home lump sum is:
- €300.000 x 0,35% = €1050
You add this amount to your income in Box 1. Fortunately, you can offset this amount with deductions, such as the interest you pay on your mortgage. Make sure you properly include these deductions in your tax return to avoid unnecessary taxes.
