1 January 2024: Federal long-term savings to be abolished
August 2023 - On 1 January 2024, tax relief under federal long-term savings will be abolished in our country. Today, this benefit applies to deposits in a life insurance contract or through capital repayments for a second home. What do you need to know about this?
Situation
Long-term savings is a personal income tax credit to which you are entitled if you incur specific expenses. Specifically, it involves repaying a mortgage loan or paying a premium into a tax-deferred life insurance policy. The maximum amount eligible depends on your income. The tax benefit is equal to 30% of the expense incurred.
Limitation scope of long-term savings from 1 January 2024
However, from 1 January 2024, the federal government plans to limit the scope of the tax benefit. Loans taken out from that date will no longer be eligible for the long-term savings tax benefit. The same applies to life insurance contracts that serve as security for such loans (so-called debt balance insurance).
Consequently, all tax benefits related to long-term savings, directly or indirectly related to acquiring property, are abolished. However, the tax benefit will remain for deposits made under 'ordinary' life insurance policies (Branch 21 and Branch 23).
Transitional measures tax benefit long-term savings
Some transitional measures apply to the introduction of this measure.
For instance, the tax benefit of long-term savings will remain in force for current loans, i.e. until maturity. However, what cannot be done is to extend this maturity to enjoy the tax benefit for longer too. So, the benefit will be limited to the original term.
Until 1 January 2024, you can still additionally finance in real estate through the conclusion of a loan while retaining the related tax benefit for long-term savings.
