Family mortgage: how the interest deduction works

Lending your child money for a home can do double duty: your child gets affordable financing, and the interest can be deductible. That is the family mortgage, and the rules are friendlier than most people think.

What is a family mortgage?

A family mortgage (familiehypotheek) is a loan between family members used to buy or improve the borrower's own home. The loan is legal without a bank, and the interest your child pays you stays inside the family.

The 360-month rule

For the interest to be deductible (renteaftrek), the loan must be repaid annuity-style within a maximum of 360 months, and it must be reported in the tax return. Miss the repayment structure and the deduction is gone.

Market-conform, always

The rate must be market-conform: what an independent lender would charge under comparable conditions. Too low and the Belastingdienst sees a gift. Unreasonably high is not accepted either.

Notary or not?

Registering the mortgage right at the notary (€750 or more) gives the strongest position, but it is optional for the deduction. A written market-conform agreement with real monthly payments already satisfies the Belastingdienst.

FLUX5 drafts the agreement, debits the payments monthly and stores the proof for seven years.