How mortgage interest deduction works in Belgium - everything you need to know

How mortgage interest deduction works in Belgium This is an essential question for every Belgian homeowner. Mortgage interest deduction can significantly reduce your annual tax burden, but it is also one of the most complicated aspects of Belgian taxation. This guide gives you a complete overview of how the system works, what you can deduct and how to make the most of it.

What is mortgage interest deduction?

Mortgage interest deduction is a tax benefit available to homeowners. In other words, you can partially deduct the interest you pay on your mortgage from your taxable income. This reduces your net income tax.

This is an important distinction: you cannot deduct the full mortgage amount - only the interest portion. If you have borrowed €200,000 at 3% interest, that means €6,000 in interest per year. This €6,000 can (under certain conditions) be deducted.

It is worth noting that Belgian mortgage tax rules cover three separate elements that may all be deductible depending on your region: the interest payments themselves, capital repayments, and mortgage-linked life insurance premiums (known as schuldsaldoverzekering or assurance solde restant dû). The conditions for each element differ, so it pays to understand all three rather than focusing on interest alone.

The system differs by region

Belgium's three regions each have different rules on mortgage interest deduction. Your benefits depend entirely on where your property is located - not where you work or where you are registered for tax purposes. If you own property in one region but work in another, the region of the property determines which rules apply to any regional tax reductions.

Flanders: no more mortgage interest deduction

In Flanders, mortgage interest deduction was completely abolished as of 1 January 2020. This was a radical change. Flemish homeowners can no longer deduct their mortgage interest from their taxable income. The measure sparked considerable political debate in Flanders - many critics felt the benefit primarily favoured higher-income homeowners.

The consequence: if you live in Flanders and took out a new mortgage after 2020, you are entitled to no mortgage interest deduction. This has made saving and investing relatively more attractive as alternatives.

However, one important nuance remains for Flemish homeowners: a federal-level interest deduction (gewone intrestaftrek) still technically exists at the federal level for investment properties and second homes. This allows you to deduct mortgage interest on a non-owner-occupied property against the notional rental income (kadastraal inkomen) attributed to that property - but this is a narrow provision and is not the same as the broad regional deduction that was abolished.

Furthermore, as of 1 January 2025, Belgium ended the tax deduction for interest on mortgages for second homes and investment properties at the federal level as well. This is a significant change that affects anyone who took out or refinanced a mortgage on a secondary property from that date onward. If your loan predates 2025, transitional arrangements may apply - always verify with a tax adviser.

Brussels: limited mortgage interest deduction

In Brussels, mortgage interest deduction still exists, but it is very limited and subject to ongoing changes. The current rules are complex and are adjusted regularly. In principle you can deduct part of your mortgage interest, but:

• The amount is usually capped at a certain maximum (a percentage of your total income or a fixed ceiling, depending on the specific regime)
• It applies mainly to first homes (your family residence)
• Deducted interest is generally declared on your tax return
• The property must be located in the Brussels-Capital Region

Brussels also offers a regional chèque habitat scheme for lower- and middle-income households, which provides a tax reduction on both capital repayments and mortgage-linked insurance premiums. This runs separately from the interest deduction itself. Because Brussels rules evolve frequently, always check the current position on the FPS Finance website or with a local tax professional before filing.

Wallonia: mortgage interest deduction retained

In Wallonia, mortgage interest deduction still exists, and the system remains considerably advantageous compared with Flanders. Walloon homeowners can use their mortgage interest as a tax deduction for their principal residence. Here is how it works:

You pay your mortgage interest to the bank. This interest can be deducted from your taxable income, which reduces your income tax. For many Walloon homeowners this is a significant benefit - sometimes several thousand euros per year.

Wallonia also operates its own chèque habitat system (introduced in 2020 to replace the old federal woonbonus equivalent). This provides a tax reduction on capital repayments and insurance premiums in addition to the interest deduction. The amounts are income-dependent and taper off as income rises. A household with modest income can combine both the interest deduction and the chèque habitat, making the total tax benefit more substantial than the interest deduction alone would suggest.

How do you calculate the mortgage interest deduction?

Step 1: identify your interest component

Your first step is to determine how much interest you actually pay. Your bank provides this information annually in your statement. Your mortgage consists of two parts:

• Capital repayment - the amount you pay back towards the principal (NOT deductible as interest, though separately deductible in some regional schemes)
• Interest - the amount you pay in interest charges (deductible, under certain conditions)

For example: your monthly payment is €1,000. Of this, perhaps €200 is interest and €800 is capital repayment. Over a year your total interest is therefore €2,400. In the early years of a mortgage, the interest component is typically much higher - on a standard annuity mortgage the split gradually shifts over time as the outstanding balance falls.

Your bank is legally required to send you an annual fiscal attestation (usually in January or February, for the previous tax year). This document breaks down exactly how much you paid in interest, capital and insurance premiums during the year. Keep it carefully - it is the primary document you need when filing your tax return.

Step 2: check the conditions for your region

For Wallonia and Brussels - the regions where mortgage interest deduction still applies to the principal residence - specific conditions must be met:

• It must relate to your family home - your primary residence where you actually live and are registered
• The mortgage must be for a property purchase, construction or major renovation - conditions vary slightly by region and regime
• It must be a "recognised" mortgage - drawn up by a notary (hypothecaire lening), not simply a personal loan or consumer credit
• You must have actually paid the interest - with the fiscal attestation from your bank as proof
• The loan term must usually be at least 10 years - shorter-term bridging loans typically do not qualify

Step 3: determine the maximum deduction

In Wallonia there is often no absolute ceiling on the interest deduction itself - you can in principle deduct the full amount of interest paid on your principal residence. In Brussels, a maximum tax benefit may apply depending on the specific regime under which your loan was taken out.

Example for Wallonia:

• You pay €6,000 in interest per year
• Your marginal tax rate is 40%
• Your tax benefit is approximately €2,400 (40% of €6,000)

You receive this benefit through a lower income tax bill. Note that Belgium uses a progressive income tax scale with rates of 25%, 40%, 45% and 50%. The deduction is applied at your marginal rate - meaning a higher earner gets proportionally more benefit from the same deduction. This is one of the arguments that led to the abolition of similar schemes in Flanders, where critics argued the system was regressive.

Step 4: enter it on your tax return

On your annual tax return you declare the mortgage interest deduction. In Wallonia and Brussels there is usually a specific code or form for this purpose. The Belgian tax return is filed online via Tax-on-web (accessible through the MyMinfin portal). Key codes on the tax form relate to:

• Interest paid (specific code varies by regime and region - check your fiscal attestation which usually states the relevant code)
• Capital repayments (separate code, for regional reductions)
• Life insurance premiums linked to the mortgage (separate code)

You will need the following documentation:

• Annual fiscal attestation from your bank (mandatory)
• Mortgage deed (copy, for the first year you claim)
• Notarial documents confirming property purchase

Practical example: how the benefit works

Let us take a realistic example:

Walloon homeowner:

• Gross annual income: €50,000
• Mortgage interest paid during the year: €5,000
• Marginal tax rate: 40%
• Without deduction, income tax would be calculated on €50,000
• With deduction: taxable income falls to €45,000
• Tax saving: €5,000 × 40% = €2,000 per year

This means the bank is not the only party receiving your interest payments - you also get €2,000 back each year through a lower tax bill. Over 20 years that amounts to a total benefit of €40,000. In practice, the benefit shrinks year by year as the outstanding balance falls and you pay progressively less interest - but the cumulative saving over the life of the loan is still very significant.

Flemish homeowner (new mortgage after 2020):

• Same situation
• Mortgage interest deduction: €0
• Tax saving: €0

This illustrates why the abolition in Flanders was painful for many homeowners - particularly those who bought at the top of the market with large loans.

Limits and exceptions

There are important limits to mortgage interest deduction:

Primary residence only

In most cases you can only deduct the interest on your family home. A second home, holiday property or investment property? That interest is generally not deductible - and from 1 January 2025, even the narrow federal deduction that previously applied to investment properties has been abolished. If you refinanced a loan on a second home before that date, check with a specialist whether transitional rules protect your existing deduction.

Recognised mortgages only

Your mortgage must have been taken out via a notary and a registered financial institution. A private loan, even for a property purchase, does not qualify. Consumer credit taken out to fund a purchase is similarly excluded.

Interest rate conditions

The rules may become stricter when you refinance. In some situations - for instance with refinancing or restructuring - restrictions apply to what you can deduct. In particular, if you significantly increase the outstanding capital when refinancing, only the interest on the original principal may qualify. Always seek advice before refinancing if you currently benefit from a deduction.

Income ceiling

Some regional schemes apply income limits. In Wallonia's chèque habitat, for example, the benefit phases out at higher income levels. If your income exceeds a certain threshold, your total combined deduction and reduction may be restricted.

The 30% rule - what is it?

The so-called "30% rule" is sometimes mentioned in the context of Belgian taxation, particularly by expatriates. It refers to a special tax regime for qualifying international executives and researchers working in Belgium, under which a flat-rate 30% of gross remuneration can be treated as tax-free cost reimbursement. This is a separate regime and has nothing to do with mortgage interest deduction. If you are an expat benefiting from the 30% regime, your net taxable income is already reduced - so the interaction with mortgage interest deduction (where it still applies) can produce a different result than for a standard Belgian taxpayer. A tax specialist familiar with both regimes is worth consulting.

Tips to maximise your mortgage interest deduction

1. Know the rules for your region

Check exactly which rules apply in your region. Wallonia, Brussels and Flanders differ considerably. A call to your local authority or tax office can clear up a great deal of uncertainty. The FPS Finance website (finance.belgium.be) publishes regional-specific guidance and is updated after each tax year.

2. Keep good records

Keep your annual fiscal attestations, mortgage deed and notarial documents. The tax authorities can ask for proof at any time. Poorly documented deductions may be refused. It is good practice to keep a dedicated folder - physical or digital - with all mortgage-related tax documents for the full duration of the loan.

3. Claim at the right time

If your mortgage is running and you benefit from the deduction, make sure you declare it every year. As you pay off your mortgage - and your interest decreases - your benefit will gradually shrink. Never assume it has been carried forward automatically from the previous year.

4. Compare mortgage structures

If you are taking out a mortgage, make sure you understand what the interest component is. Certain product types (for example fixed rate versus variable rate) can have an impact. According to Expatica data, the average mortgage interest rate in Belgium in 2024 was 3.4%, which sat below the EU average of 4.34% at that time. Belgian rates have gradually eased from the highs seen in 2023, though they remain above the ultra-low levels of 2020-2021. Locking in a lower rate reduces your total interest bill - and therefore also reduces the absolute value of your deduction, but your net-of-tax cost falls regardless.

5. Seek tax advice

For larger mortgages or complex situations (shared ownership between partners, inheritance, second properties, non-resident taxation) advice from a tax specialist or accountant can save you thousands of euros. This is particularly true following the 2025 changes to second-home mortgage deductions - many homeowners are not yet aware of how these affect their annual filing.

The future of mortgage interest deduction

Mortgage interest deduction in Belgium is subject to political change. Flanders abolished regional deduction in 2020; Wallonia and Brussels still maintain theirs - for now. The federal government's 2025 reform abolishing deductions on investment property loans shows that further tightening at both federal and regional level is possible.

Debates in parliament about simplification or further abolition arise regularly. The general direction of Belgian tax policy has been to reduce mortgage-related deductions in favour of a simpler, lower flat-rate system - a trend seen across several EU member states. What is true today may change after the next federal or regional budget cycle.

This means: keep an eye on the current rules on a regular basis and review your filing each year rather than assuming last year's approach still applies.

Summary: how does mortgage interest deduction work?

• Flanders: mortgage interest deduction has been abolished (since 2020). No benefit remaining for the principal residence. From 2025, the federal deduction on second-home mortgage interest is also gone.
• Brussels: a limited mortgage interest deduction still exists, but it is capped. The chèque habitat scheme may also apply. Check the current rules carefully.
• Wallonia: mortgage interest deduction is available for family homes. You can deduct your interest from taxable income, which reduces your tax bill. The chèque habitat provides additional benefit on capital repayments and insurance premiums.

The calculation is straightforward: determine your annual interest payments, deduct them from your income and enjoy the tax benefit. But the conditions under which this is permitted are complex and vary by region - and they have been changing more frequently in recent years.

Next step: make sure you get the most out of your benefit

Whether you are taking out a new mortgage or have been a homeowner for years - check that you are using all the deductions available to you. For many homeowners in Wallonia this can make a difference of thousands of euros per year. Make an appointment with a tax specialist or check your regional tax authority's website for the most up-to-date rules.

Also: if you are looking for the best mortgage terms and interest rates, compare mortgage offers from brokers and credit intermediaries. A better rate means lower interest to pay - and every fraction of a percentage point makes a difference!

Frequently asked questions about mortgage interest deduction in Belgium

Is mortgage interest tax deductible in Belgium?

It depends on where your property is located. In Flanders, the regional deduction for mortgage interest on a principal residence was abolished on 1 January 2020 - so no, it is not deductible there for loans taken out after that date. In Wallonia and Brussels, mortgage interest on your principal residence is still deductible under specific conditions. Additionally, from 1 January 2025, Belgium abolished the federal-level interest deduction that previously applied to second homes and investment properties. So the short answer is: yes in Wallonia and Brussels (for your primary home), no in Flanders, and no anywhere for second-home mortgages taken out from 2025.

How does mortgage interest get deducted in practice?

Your bank sends you an annual fiscal attestation, usually in January or February, showing exactly how much interest (and capital) you paid during the previous year. You enter the relevant figures into your Belgian tax return via the Tax-on-web platform (MyMinfin), using the specific code indicated on your attestation. The deducted interest reduces your taxable income, and your income tax is recalculated on the lower figure. You do not receive a direct cash refund - rather, you pay less tax overall. In some cases you may receive a refund if your payroll withholding tax was calculated on your full income throughout the year.

What is the 30% rule in Belgium?

The 30% rule in Belgium refers to a special tax regime for qualifying expatriates - typically international executives, specialists and researchers recruited from abroad to work in Belgium. Under this regime, 30% of gross remuneration can be treated as a tax-free expense reimbursement, effectively reducing the taxable income base. It is a separate system from mortgage interest deduction and is administered through the employer. If you benefit from the 30% expat regime and also own property in Wallonia or Brussels, the interaction with mortgage interest deduction can be complex - professional tax advice is particularly worthwhile in this situation.

Can I deduct mortgage interest on a second home or investment property?

From 1 January 2025, Belgium ended the federal tax deduction for interest on mortgage loans secured on properties other than the principal residence. This means that if you took out a mortgage on a second home or rental property from that date, you cannot deduct the interest. Loans that predate 2025 may fall under transitional rules, but these are narrow and depend on whether the loan has been refinanced or restructured. If you have an older investment property loan, verify your position with a tax professional before filing.

Does refinancing affect my mortgage interest deduction?

Refinancing can complicate your deduction. If you simply renegotiate the interest rate on the same outstanding balance with the same or a different lender, the deduction generally continues unaffected. However, if you increase the capital borrowed at the point of refinancing, only the interest on the original outstanding principal may remain deductible - the interest on the additional capital may not qualify. Regional rules also differ slightly on this point. Always ask your bank or a tax adviser to confirm the tax position before completing a refinancing.

What documents do I need to claim the mortgage interest deduction?

The main document is the annual fiscal attestation from your lender, which breaks down the interest, capital repayments and insurance premiums you paid during the year. For the first year you claim, you will also need a copy of the mortgage deed and the notarial documents confirming the property purchase. Keep all of these documents for the full duration of your loan plus at least seven years after it ends, as the Belgian tax authorities can request them during an audit.