Buying

08/12/2009Tax advantages for expat house buyers

Buying a home in the Netherlands? Real estate specialist Jaap Russchen spells out the tax advantages.

Buying a home in the Netherlands

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Interest payments on mortgages are tax deductible if the property is used as the primary residence and you are registered as a resident taxpayer. For instance, if you pay EUR 1000 in interest per month and your income tax level is 42 percent, you receive back EUR 420 per month. You can arrange to receive this every month by filling in a special form (www.belastingdienst.nl), or as one payment at the end of the year.
Expenses relating to the closure of the mortgage are tax-deductible. In terms of the notary, costs to conclude the contract are also tax deductible, but the costs of transfer are not. Therefore, the commission (1%) for the bank and the valuation report asked by the bank are also tax-deductible, as are the notary costs related to the mortgage.
Increases in the value of the house are tax-free if used as a primary residence as there is no capital gains tax, but can have an impact on the amount of mortgage-interest deductible if you use the profits to purchase your next home.
Tax will be levied on the ‘deemed rental value’ of the house (compared to deductions allowed for interest, this amount is normally extremely low). This value is determined by the local municipality and will be used by the tax authorities.
Note: If you leave the country but continue to own the house, the tax deductions disappear as they are based on residency. This also means if you rent out your house and start living somewhere else in Holland or abroad, the tax deductions disappear as well.
The 30 percent ruling may have a positive impact on your ability to get a mortgage, or the amount you might be eligible for.

Expatica/ Jaap Russchen, Founder Amsterdam House Hunting

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