Dutch tax residents
If you are a Dutch tax resident, you need to pay attention to the following things:
Box 1
If you own a property and use it as your main residence, it is considered a box 1 asset. If it's financed with a mortgage, it could qualify for a mortgage interest deduction. In this case, any interest you have paid can be deducted from your taxable income.
Purchase costs related to the mortgage are also deductible, for example, notary fees.
Box 3
Second houses and houses which are not your main residence are normally subject to box 3 taxation at WOZ value, minus the mortgage value, if applicable. Property which is in your possession on January 1 of a particular year needs to be declared in the income tax return of that year.
Real estate abroad
As a resident taxpayer, you have to declare your worldwide savings and investments. However, tax treaties ensure that special rules apply for real estate located abroad. On the basis of most tax treaties, the right to levy tax on real estate is allocated to the country where the real estate is located, rather than the country where the taxpayer is residing.
This means that real estate abroad needs to be declared in the Dutch tax return, but that residents of the Netherlands are entitled to double taxation relief that equals the Dutch tax burden. Simply put, you won't be taxed in the Netherlands on your properties abroad.
Relocating to a new home
You might purchase a new house before your old one is sold. For this specific situation, there is an option to keep both properties in box 1 and receive a mortgage interest deduction for both. However, the old house must be empty and on sale. You can benefit from this allowance for a maximum of 3 years, plus the year in which you moved. The same rule also applies when your new house is empty and at your disposal, for example, during a renovation.
Non-residents with real estate in the Netherlands
Real estate that is located in the Netherlands is, on the basis of most tax treaties, taxed in the Netherlands. As a non-resident with property in the Netherlands, you become liable to Dutch taxation and must report your real estate to the Dutch tax office. The property is normally subject to box 3 taxation at WOZ value, minus the mortgage value, if applicable.
Leaving the Netherlands
If you leave the country for a longer or indefinite period, your Dutch house will probably not qualify as your main residence anymore and will therefore no longer be taxed in box 1. However, there are options to keep the property in box 1. The taxation on the property depends on its status. The main question is whether it is on sale, rented out or kept at your disposal:
Rented out
If you are renting your house out, it will be subject to box 3 taxation at WOZ value, minus the mortgage value, if applicable.
Your house on sale
If you leave the Netherlands and put your house where you live up for sale, you have the option to keep the house in box 1 and receive a mortgage interest deduction. This rule applies despite you not being a resident in the Netherlands. The house can be kept in box 1 for a maximum period of 3 years, plus the year of relocation.
The mortgage interest deduction will be balanced against your Dutch income of that year, or, if not applicable, with your personal income over the 3 previous years. If that income was not sufficient to balance the deduction, the mortgage interest deduction will be carried forward for a maximum of 9 years.
House at your disposal in case of temporary emigration
Emigration does not always mean that you leave the Netherlands forever. It is possible that you will live in another country temporarily. You may, for example, be asked by your employer to work outside of the Netherlands for a certain period. In that case, you may wish to keep your house in the Netherlands, so that you can live in it when you return.
In such a situation, the house may also be taxed in box 1, with the possibility of the mortgage interest deduction. Declaration and taxation in box 3 are then not applicable.
However, the following conditions need to be met:
- You must have been the owner of the house for at least one year before you emigrated. In that year, it should have also been your main residence in the Netherlands;
- The property is not made available for the rental market;
- During your stay abroad you may not reside in another purchased house. You may, however, rent a property.
Individuals and entrepreneurs can contact us for tax advice, tax compliance and accountancy. We also assist corporations and financial and legal service providers with tax matters.
