Tax bonus on mortgage interest

What it means

The tax bonus on paid interest cuts income tax by part of the interest paid on a housing loan. Unlike a non-taxable allowance it reduces the tax itself rather than the base, and if the tax is too small, the difference is paid out.

It shares only its name with the child tax bonus. Entitlement turns on the age of the applicant, an income ceiling derived from the average wage, a single housing loan agreement and a single Slovak home.

The bonus is computed only from interest, never from principal repayments, and only from interest actually paid in the year. Nor does every loan that funds a flat qualify: the Act ties it to a housing loan agreement, and an ordinary consumer loan taken out for renovation gives no entitlement even if the money ends up in the flat.

How it works in practice

The share of the interest and the annual cap are set by the Income Tax Act; both the cap and the income ceiling differ according to whether the loan agreement was signed before the end of 2023 or after it. On request the bank issues a certificate of the interest paid in the calendar year.

An employee claims the bonus in the annual reconciliation through the employer, everyone else in a tax return. The bank certificate is a mandatory attachment either way, and without it the claim fails even on a correctly completed form.

In the annual reconciliation we also check the income ceiling. If the employee had other taxable income in the year besides wages, from a trade licence or from renting for instance, the employer’s reconciliation is not enough and the bonus is claimed in a tax return, where the incomes are added together.

What to watch out for

The entitlement lasts five years from the month interest started running on the loan, and refinancing does not restart that window. Anyone who moves the loan to another bank expecting five more years of bonus is counting on money that will not come.

With a joint loan, agree in advance who claims the bonus and to what extent. The same interest may not be claimed twice; an audit spots it from the bank certificate, disallows one of the claims, and the tax is paid back through a supplementary return together with interest.