How to optimise your tax declaration?
Every year, it is the same old story: we have to fill in our tax declaration. For many of you, this annual exercise is like a chore. It is a pity because a tax declaration, correctly optimised, can save you money by reducing your taxes. Today, the range of tax-deductible products is so broad that it is sometimes difficult to choose. To help you get a better picture, we will describe the main fiscal products available on the market.
You can deduct the contributions paid for a home savings policy from your total net income. The home savings policy allows you to receive a loan with attractive conditions for the purchase of a personal residence in exchange for contributions.
The premiums and contributions are only deductible up to the limit of EUR 672 for the taxpayer increased by the same amount for the jointly taxable spouse (or partner in case of partnership) and also for each of the taxpayer’s children subject to a tax allowance for children.
To be deductible, the home savings contract must be taken out in order to finance the construction, acquisition or transformation of an apartment or a house to be occupied by the owner.
Private pension insurance
Taking out a private pension insurance contract allows you to build up an individual supplementary pension. The private pension insurance contract is often called the third pillar because it is a private initiative in opposition to the compulsory social-security scheme – the first pillar – and to the additional pension scheme set up by the employer – the second pillar.
The deduction ceiling for a private pension insurance contract depends on your age and varies from EUR 1,500 to EUR 3,200.
Personal loan and debit interest
You can also deduct from your total net income the debit interest linked to personal loans (purchase of movable goods, purchase of a car, holiday financing, acquisition of a portfolio of investment securities, funds to help maintain your standard of living, etc.). The debit interest on your current account or your credit card is also deductible.
However, the limitation is not applicable to debit interest related to loans contracted in order to finance the acquisition or construction of the taxpayer’s personal residence or a residence to let or to carry out a self-employed or commercial professional occupation.
The debit interest is only deductible up to the limit of EUR 336 for the taxpayer increased by the same amount for the jointly taxable spouse (or partner in case of partnership) and also for each of the taxpayer’s children subject to a tax allowance for children.
Insurance contributions and premiums
Certain contributions and insurance premiums may also be deducted from your total net income. These contributions and premiums are mainly paid for life, death, accidents, invalidity, sickness or civil liability insurance.
In case of the all-risk motor insurance, parts of the premiums related to theft, fire, broken glass, material damage and legal protection are not deductible. Only the parts related to civil liability and corporal damage are deductible.
In addition to the deduction ceiling of EUR 672 per person in the same household, a one-time premium for a debt balance insurance to ensure the payment of a loan granted in order to purchase the main residence is also deductible. The limit is EUR 6,000 maximum, EUR 12,000 in case of collective taxation and increased by EUR 1,200 for each of the taxpayer’s children subject to a tax allowance for children.
Figure it out: if you have the 4 fiscal products mentioned above, you can deduct more than a few thousand euros per year from your total net income! Not bad, is it?
Often you hear people say: “Anyway, until I have paid off my home loan it’s the bank who owns my house”. But is it true?
It is always the same question that every one of us is asking before signing a home loan with his bank. To gain a more objective overview, let’s analyse them one by one with their respective advantages and disadvantages.
The rate remains fixed for a pre-defined period and, at the end of the period, is subject to a revision. The pre-defined period can vary from one bank to another but is generally 3, 5 or 10 years.