TAIPEI (Taiwan News) — The Ministry of Finance on Wednesday rejected calls to classify mortgage interest payments as a special deduction under the individual income tax system, stating current itemized deductions provide adequate relief for most first-time homebuyers.

Special deductions in Taiwan’s tax code are standardized amounts that can be subtracted from income if criteria are met, such as having young children or incurring salary expenses. Itemized deductions allow taxpayers to deduct the actual amounts of specific documented expenses, such as medical costs or mortgage interest, according to Legispedia.

To ease the burden of homeownership, individuals can claim a deduction for mortgage interest expenses when filing their annual individual income tax returns. The ministry noted that taxpayers can deduct up to NT$300,000 (US$9,222) in mortgage interests, per CNA and UDN money.

At the current average interest rate of 2% for new loans, this corresponds to a mortgage principal of around NT$14 million, which the ministry says meets the needs of most homebuyers. The ministry emphasized that keeping mortgage interest under itemized deductions ensures fairness and aligns with the principle of taxation based on individuals’ ability to pay.

In contrast, rent expenses were reclassified as a special deduction starting in the 2024 tax year to ease the burden on renters. The cap for this deduction was raised to NT$180,000 annually, and new income thresholds target relief toward lower-income households.

The rent deduction will be applied for the first time during the May 2025 filing season. The ministry said it plans to assess the policy's effectiveness after implementation.

The government frequently receives proposals to adjust deduction thresholds and expand categories, which the ministry said will be carefully evaluated. It reiterated that tax reform decisions must balance fiscal responsibility, equity, and administrative efficiency.