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State Taxation Administration: Homeowners Who Change Their Second Home to Their Primary Residence Can Enjoy Special Additional Deductions for Home Mortgage Interest

Published: Apr 27, 2025 17:32

Recently, the 12366 Tax Service Platform of the State Taxation Administration responded in the form of answers to hot topics, stating that individuals who meet the relevant conditions for "converting a second home loan into a first home loan" can enjoy the special additional deduction for individual income tax on housing loan interest.

Question: My previous housing loan was at the first-home mortgage interest rate, and I enjoyed the special additional deduction for housing loan interest. After the release of the Notice on Matters Related to Reducing the Interest Rates on Existing First-Home Mortgages, I conducted a "loan replacement" and signed a new loan contract, with the new loan still enjoying the first-home mortgage interest rate. However, the policy stipulates that taxpayers can only enjoy the special additional deduction for housing loan interest once. Can I continue to enjoy the special additional deduction for housing loan interest after the "loan replacement"?

Answer: Yes. If a taxpayer conducts a replacement of an existing housing loan in accordance with the provisions of the Notice on Matters Related to Reducing the Interest Rates on Existing First-Home Mortgages, since the taxpayer's housing remains the same before and after the replacement, they can continue to enjoy the special additional deduction for housing loan interest.

If the loan contract number changes, the taxpayer should promptly update the information, such as the new loan contract number for the same housing, in the "Special Additional Deductions" - "Special Additional Deduction for Housing Loan Interest" section of the Individual Income Tax APP.

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Question: Do taxpayers who "convert a second home loan into a first home loan" and enjoy the special additional deduction for housing loan interest need to submit documents?

Answer: When individuals collect information for the special additional deduction for housing loan interest through the Individual Income Tax APP on their mobile phones, they need to provide documents such as the housing loan contract and loan repayment expenditure vouchers. If the information filled in is incomplete or there are doubts about the tax declaration, the tax authorities will verify the relevant situation with the taxpayer in accordance with the regulations.

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Question: When I purchased a home in 2021, I used a commercial loan that met the conditions for the first-home mortgage interest rate and enjoyed the special additional deduction for housing loan interest. In 2024, I handled the conversion of the commercial loan into a housing provident fund loan, and the newly issued housing provident fund loan still enjoys the first-home mortgage interest rate. Can I continue to enjoy the special additional deduction for housing loan interest after the "conversion from commercial to provident fund loan"?

Answer: After taxpayers handle the conversion of a commercial loan into a housing provident fund loan (including full conversion into a housing provident fund loan, as well as conversion into a "combined loan" of a housing provident fund loan and a commercial loan), if the newly issued housing provident fund loan meets the conditions for the first-home mortgage interest rate as stipulated in the Notice of the State Council on Issuing the Interim Measures for Special Additional Deductions for Individual Income Tax (Guo Fa [2018] No. 41), since the taxpayer's housing remains the same before and after the replacement, they can continue to enjoy the special additional deduction for housing loan interest.

You can enjoy the deduction by filling in the information, such as the new housing provident fund loan contract number for the same housing, in the "Special Additional Deductions" - "Special Additional Deduction for Housing Loan Interest" section of the Individual Income Tax APP according to your own situation. After completing the filing, you can either push the above information to your employer to enjoy the deduction during the regular withholding process or enjoy it when handling the annual settlement and payment in the following year.

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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State Taxation Administration: Homeowners Who Change Their Second Home to Their Primary Residence Can Enjoy Special Additional Deductions for Home Mortgage Interest - Shanghai Metals Market (SMM)