Can a home loan reduce maintenance?

Can a home loan reduce maintenance?

According to a most recent ruling made by the Austrian Supreme Court, the answer to this question could be yes. In Austria, as an exception, divorce-related housing costs could reduce the basis for calculating maintenance.

Explanation:

The costs of a loan cannot generally be deducted from the basis for calculating maintenance, because otherwise the more debt the debtor takes on, the less maintenance they would have to pay.

However, in a recent case argued before the Supreme Court, the Supreme Court has made a very rare exception for the costs of a loan taken out to purchase living space after a divorce.

What exactly was this recent court case argued before the Austrian Supreme Court about?

Backround: The parents divorced in 2018 and the husband (father) transferred half of his condominium to his wife, where the wife lived together with their daughter from then on. The wife took over the repayment of the remaining home loan. In addition, the father undertook to make a monthly maintenance payment of EUR 400 to the daughter.

The daughter recently requested an increase in the monthly maintenance amount from EUR 400 to EUR 800 starting January 2023. The father objected that he had bought an apartment himself after the divorce and had to repay a loan for it. The loan installments were to be deducted from the basis of assessment.

How did the Supreme Court rule?

The Supreme Court held that housing costs (such as operating costs, rent, deposit, home loan installments, home furnishing costs, home improvement costs) incurred by the maintenance debtor for their own home cannot generally be deducted from the basis of assessment for maintenance as everyday expenses.

However: as an exception, divorce-related housing acquisition costs (including furnishings) could reduce the maintenance assessment basis. This presupposes that the person who is obliged to pay maintenance has had to leave the matrimonial home to the person who is entitled to maintenance; that his or her expenditure on the purchase of the home is appropriate to his or her living conditions; that there is a close relationship in time between the divorce and the purchase of the new home and finally, that the purchase of the home now occupied by the person obliged to pay maintenance is both reasonable and necessary.

Result:

The Supreme Court overturned the decision of the previous court, and consequently ordered the Court of First Instance to broaden the basis for the decision in the subsequent proceedings, with regard to the necessity and appropriateness of the purchase; so that the question of the deductibility of the loan installments can be comprehensively assessed.

OGH 21.11.2023
2 Ob 185/23d