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When carrying out buildings or refurbishment works, the value of the property can be increased. With the effect that this added value may have consequences on wealth tax.
This impact can be limited by financing these works with bank loans, by refinancing the property or increasing the mortgage. The deductibility of this new debt will minimize wealth tax.( Always keep in mind this way of financing when planning to carry out these works.)
Together with the obligation to amortize the debt each year, this increases the exposure to wealth tax.
Loan accounts prior to 2017 are not deductible from wealth tax, but it can be argued that refinancing them with bank debt could be.
Taking advantage of low interest rates and bank financing makes good business sense.
Why not invest the funds and take advantage of the capital growth and make your capital work for you?
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