korkovähennystä

Korkovähennys is a Finnish term referring to a tax deduction related to interest expenses. Specifically, it relates to the deduction of interest paid on certain loans from taxable income. This mechanism is designed to reduce the tax burden on individuals and businesses who have incurred interest costs.

The most common application of korkovähennys is for individuals who have taken out housing loans. Interest paid on a mortgage can typically be partially deducted from income when calculating income tax. This reduces the amount of tax owed, making homeownership more affordable. The specific percentage of interest that can be deducted and any annual limits are subject to Finnish tax legislation and can change over time.

Beyond housing loans, korkovähennys may also apply to interest paid on other types of loans, depending on the purpose of the loan and the borrower's status (individual or company). For businesses, interest expenses incurred on business-related loans are generally deductible business expenses, which falls under a similar principle of reducing taxable profit based on interest costs.

The purpose of korkovähennys is to provide a tax incentive for borrowing, particularly for investments like housing, and to acknowledge the financial burden of interest payments. It is an important aspect of the Finnish tax system that affects personal finances and business operations. Taxpayers are encouraged to consult the Finnish Tax Administration (Verohallinto) or a tax professional for specific details regarding their eligibility and the application of korkovähennys.