Disagio (Damnum)
Up-front interest withheld when a loan is paid out.
A Disagio, also called Damnum, is the difference between the nominal loan amount and the amount the bank actually pays out — in effect, interest paid in advance in exchange for a lower rate. For a rental property it is a Werbungskosten item. Advance payments for a use of more than five years normally have to be spread over that period, but §11 Abs. 2 EStG excludes a Disagio from that spreading to the extent it is market-standard, so it can be deducted in full in the year it is withheld. The administration treats a Disagio of up to 5 % on a loan with a fixed rate for at least five years as market-standard. The loan contract and payout statement are the evidence.
Last reviewed: by Yann Lephay.