You have decided to buy a property in the Netherlands. Once you have found the right place and the right property you also would like to know what tax complications are related with the purchase. In the Netherlands you have to pay different kind of taxes. For example overdrachtsbelasting, onroerende zaakbelasting, riool- en afvalstoffenheffing and waterschapslasten. A couple of these taxes are based on the WOZ-value of your house. The WOZ-value is made by the municipality and represents the estimated market value of the property. So the higher the market value the more tax you pay, hence we advise to review this WOZ-value carefully each year.
Is my mortgage interest deductible?
In The Netherlands you are able to deduct the paid mortgage interest when buying a property. You can set off the paid mortgage interest against paid income tax from your income of employment. Your income of employment is taxed by way of a progressive tax system. The more you earn the more tax you pay.
You can only deduct the mortgage interest that sees on the mortgage loan that has been taken into account and related to buy, improve and/or renovate the property.
Income of employment is being taxed at a maximum of 51,95%. In 2018 you can deduct the mortgage interest at a rate of 49,5%. This percentage will be lowered each year with 0,5%. If you have income in the highest tax bracket then you will receive less deduction each year.
One-time financing costs
The expenses that is related to the buy, and mentioned on the notary invoice, ar in some cases deductible in your personal income tax return. For example, provisions on NHG, mortgage deed and translator costs. These costs are also known as one-time financing costs. Hence it is only deductible once the property is bought in the year you actually paid these costs.
Monthly tax refund
In some cases the mortgage repayment to the bank can lead to financial problems. Therefore, the Dutch tax authorities provides all property buyers a monthly tax rebate. The taxpayer receive a monthly tax refund in advance. Normally you need to declare the paid mortgage interest and financing costs in your annual tax return.
Brouweel
If you found this article interesting or you are a sportsperson and you would like assistance regarding your taxes, then do not hesitate to contact us. We are happy to assist, contact us at info@brouweel.nl
