The mortgage state contribution to young people changed in 2018. For 2018, clients will already claim a direct tax bonus. Learn how to proceed with each bank.
In 2017, there was a significant change in the provision of support to young applicants for a mortgage loan for housing. I wrote an article about the whole issue.
This was one of the first articles on the subject when it was not yet clear whether the change would really go through. In addition to the prepared changes, I also devoted to detailed calculations and comparison of the original model with the new model.
Changed to a tax bonus
Today we know that the state contribution for young people has finally changed to a tax bonus from 1.1.2018. For the first time, clients can apply it now – for the 2018 tax period.
Let’s remember what clients must meet to qualify for the tax bonus:
- age up to 35 years
- income up to 1.3 times the average wage in the Slovak Republic ascertained by the Statistical Office in 2017 (it is approximately USD 1240)
- the purpose of the loan meets the conditions of the tax bonus, ie it is a mortgage for housing, construction or reconstruction (not an American mortgage or refinancing)
You can see more about the tax credit and the current conditions for mortgages for young people in the report by Marisa. 28.12.2018 was broadcast and I had the opportunity to add my comment.
The whole topic has been elaborated in detail on the Internet. What you might be interested in is the individual banks and the way to proceed. So I decided to map the situation in detail and give you an overview. The information was consulted with the banks.
The Bank shall issue free of charge to the client – principal debtor – Confirmation of interest paid, the structure of which is prescribed by law.
The bank will issue a confirmation for each loan that meets the conditions of age and purpose for claiming the bonus and will send it to the client by mail to its correspondence address .
From 2.1.2019, the DEBTOR eligible for TAX BONUS may ask the Bank to issue a Confirmation for interest paid.
The Confirmation will be issued to the Principal Borrower on the basis of a written Application submitted at a bank branch within 30 calendar days from the date of submission of the Application.
In the Application the Borrower shall also specify the method of delivery of this Confirmation:
- BY POST to the correspondent address of the client
- PERSONAL at a selected bank branch
Confirmation of interest paid is issued once a year free of charge.
The Bank will automatically issue the Confirmation form free of charge to the Internet Banking (IB) mailbox of the principal debtor. If the principal debtor does not have an IB, the Bank shall also send the Confirmation by post to the correspondent address of the principal debtor free of charge. Confirmation will be generated automatically annually – current as of January 15, 2019, only for standard mortgages.
If this document has not been sent to the client, the client must apply for a Confirmation at the branch.
The Bank is exposed to free the debtor at his request proof of payment of interest on an award of tax relief on interest paid, which represents an amount equal to 50% of interest paid in the fiscal year, with a ceiling of 400, – USD per calendar year.
What to do with the confirmation and what to forget?
Provide the confirmation from the bank to your accountant, who will solve your tax return for 2018. If the employer processes it for you in the form of an annual tax settlement, hand over the confirmation (or its scan) to the appropriate department.
Note that if you are in loan two, only the main debtor can apply for a tax bonus.
For 2018, you will receive a tax relief calculated in proportion to the month in which you took out the loan. Finally, the tax relief will be calculated on the interest paid on the loan up to a maximum of USD 50,000. If you have drawn a higher loan – do not mind. However, half of the interest paid will only be refunded from USD 50,000.