3 tips for your 2012 income tax return

In our latest article, we discussed the filing of the income tax return 2012: filing needs to be done before the 1st of April for resident taxpayers and before the 1st of July for non-resident taxpayers!

In this article we would like to give you some tax return tips which could reduce your taxable income and save you money. This article is not intended as a complete overview of all deductible costs but will give you an idea of how the complex Dutch tax system works.

Below you will find the 3 most important declaration tips / deductible costs for 2012:

1. Mortgage interest & deductible costs for buying a house

The most discussed and interesting deductible cost to be introduced to the Dutch tax system in years is the mortgage interest deduction. The government amended the legislation on some points as of 1 January 2013 but in general all mortgage interest is deductible from your taxable income if you closed your mortgage before 2013. If you closed the mortgage on or after 1 January 2013 the interest is only deductible if the mortgage is not redemption-free, in other words the loan repayments made have a principal and interest portion. If your income is in the highest tax bracket costs are deductible up to 52%.

There are many other costs related to purchasing property which are also tax deductible besides the mortgage interest. For example, mortgage advisory, notary and property valuation costs. There are some costs which are not deductible, such as real estate agent costs. If you would like to know exactly what is deductible and what is not, we advise you to contact our office!

2. Specific healthcare costs

If you have incurred healthcare costs in 2012 some specific costs could be deductible, such as medicines prescribed by your doctor, healthcare devices (wheelchairs for example) or travel costs to the hospital. Whether the costs are deductible or not depends on a threshold which is related to your gross income.

3. Study costs

The Dutch government aims to encourage studying by making the study costs deductible in the income tax return. This means that the expenses incurred for study geared towards a future profession are deductible up to a maximum of € 15,000. There is however a threshold of € 454 and study costs which are for personal hobbies are not deductible. For example, if you only take a photography course with no intention of becoming a professional photographer you are not able to deduct these costs.

Looking for more tips? Check out our second article, where we delve deeper into the 2012 income tax return.