You pay off your mortgage every month. These monthly payments can be divided into gross and net monthly payments. The difference lies in the mortgage interest deduction. Mortgage interest deduction is a scheme introduced by the government, or more specifically, the tax authorities. The interest you pay on your mortgage is refunded by the tax authorities at the end of the year.
Gross monthly costs = repayment + mortgage interest
Net monthly costs = repayment + mortgage interest – mortgage interest relief
Annual income tax
You claim mortgage interest relief during your annual income tax return. This means you pay the gross monthly costs and only receive the tax relief after your tax return has been processed. You can also choose to have the tax relief paid out every month.
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