State assistance with housing loan repayments from 1 January 2024

How will the state support loan repayments in 2024? State assistance with housing loan repayments is governed by Act No. 508/2023 Coll. of 8 December 2023 and Act No. 526/2023 Coll. of 12 December 2023, which took effect on 1 January 2024.

The legislative changes affect everyone who has taken out a mortgage loan in the past or who decides to take out this type of loan.

THESE ACTS COVER THREE AREAS:

• Changes to the conditions of the tax bonus for young people for mortgages concluded from 1 January 2024
• An extraordinary tax bonus for mortgages on which the client’s repayment increased after the interest rate was refixed in 2023
• A new state allowance towards increased mortgage repayments after interest rate refixation, paid from 1 January 2024

CHANGES TO THE CONDITIONS OF THE TAX BONUS FOR YOUNG PEOPLE FOR MORTGAGES CONCLUDED FROM 1 JANUARY 2024

For loan agreements concluded from 1 January 2024 that meet the conditions for the tax bonus for young people, the conditions for obtaining it are being improved.

The mortgage amount on which the tax bonus can be claimed is being adjusted, the maximum income of the applicant and co-applicant taken into account is being raised, and the amount of the tax bonus itself is also increasing.

TAX BONUS ON INTEREST PAID:

Source: Finportal, a.s. / Ministry of Finance of the Slovak Republic

Citizens who are entitled to the tax bonus on interest paid will now be better off. If they meet the conditions, they can receive a tax bonus on interest paid of up to €1,200 instead of the original €400. The tax bonus is calculated as 50% of the interest paid in the tax period concerned, up to a maximum of €1,200 (for mortgage loans drawn down after 1 January 2024).

EXTRAORDINARY TAX BONUS FOR MORTGAGES ON WHICH THE CLIENT’S REPAYMENT INCREASED AFTER THE INTEREST RATE WAS REFIXED IN 2023

Were you unable to fix the interest rate on your mortgage loan in time, and did your repayments rise by X% in 2023? The state has decided to help citizens repay their mortgage loans and is refunding part of the cost of their increased loan repayments in the form of an extraordinary mortgage tax bonus.

It is intended for clients whose interest rate, and therefore monthly repayment, rose after their mortgage was refixed in 2023, regardless of their age and the loan amount. The condition is that the housing loan agreement was concluded before 31 December 2022.

In this case, the state assistance can be claimed through the tax bonus in the tax return or annual tax reconciliation for 2023, which the client completes in 2024. The maximum tax bonus is 75% of the difference between the average annual repayment paid for 2022 and the annual repayment paid for 2023, but no more than €150 a month, or €1,800 a year. The client’s tax is reduced by the amount of the tax bonus.

TAX BONUS ON INCREASED LOAN REPAYMENTS after the 2023 interest rate refixation:

• State assistance with the repayment increase after REFIXATION = 75% (max. €1,800 a year – €150 a month)

TAX BONUS ON INCREASED LOAN REPAYMENTS after the 2023 interest rate refixation:

• Maximum income 1.6 times the average wage (€2,086.40 for 2022)
• 1 PROPERTY (only one loan is subsidised)
• NO LIMIT on the client’s age or the loan amount
• THE PROPERTY MUST NOT BE LET, the client lives in it permanently

WORKED EXAMPLE:

TAX BONUS ON INCREASED LOAN REPAYMENTS after the 2023 interest rate refixation

Source: Finportal, a.s. / Ministry of Finance of the Slovak Republic

NEW STATE ALLOWANCE TOWARDS INCREASED MORTGAGE REPAYMENTS AFTER INTEREST RATE REFIXATION, PAID FROM 1 JANUARY 2024

Entitlement to the state allowance applies to clients whose interest rate, and therefore monthly repayment, rose after their mortgage was refixed in 2023, or will rise after refixation in 2024 to 2027, regardless of their age and the loan amount.

The assistance is paid as a monthly social benefit to the account the client gives in the application for the allowance. The allowance amounts to 75% of the increase in the monthly repayment, but no more than €150 a month, or €1,800 a year.

The client must apply for this allowance in writing (in person or by post) to the Labour Office (ÚPSVaR) for the area where they have their registered permanent residence. A copy of the loan agreement is a mandatory attachment to the application.

STATE ALLOWANCE TOWARDS INCREASED REPAYMENTS refixation 2023 to 2027:

• Monthly payment of the state allowance from the Ministry of Labour, Social Affairs and Family (MPSVaR) or the Labour Office
• The amount of the allowance is the same as the amount of the ’23 tax bonus
• 75% of the repayment increase, max. €1,800 a year / €150 a month
• Income does not exceed 1.6 times the average gross wage for 2022, max. €2,085.40
• Claimed by an application submitted to the Labour Office / always paid one month in arrears

* Always applies to one loan agreement only

STATE ASSISTANCE WITH MORTGAGE REPAYMENTS VS. MORTGAGE REFINANCING

For refinanced mortgages, i.e. mortgages that the client “transferred” to another bank in the past, what matters is:

1. When the refinancing (the “transfer” to another bank) took place
2. What purpose is stated in the loan agreement

Assistance in the form of the tax bonus on increased housing loan repayments after the 2023 interest rate refixation can be claimed if:

• the mortgage was refinanced no later than 31 December 2022,
• the mortgage repayment increased in 2023 because the interest rate rose after refixation,
• the loan agreement states at least one of the following purposes:
• • acquisition of a residential property in Slovakia, or part of one,
  • construction of a residential property in Slovakia,
  • alteration (renovation) of a completed residential building.

State assistance can also be claimed for mortgages refinanced (“transferred” to another bank) in 2023, though no longer in the form of the tax bonus but through the state allowance towards increased mortgage repayments, which the Labour Offices have been paying since 1 January 2024.