01 March 2023, by Peter Geurts

The Netherlands is often considered as “heaven” or “the place to be” when it comes to taxes. And this is not only for people who are enjoying the 30% ruling. With the annual tax Dutch declaration coming up, Peter Geurts from Klår Finance wants to give you more clarity on how it all works. This might help you focus on what possible advantages there are for you!

The Dutch Tax Authorities (Belastingdienst) support home ownership. So, they created several benefits when you take out a residential mortgage.

1. Tax-deductible costs related to getting a mortgageFirst up: you can subtract the mortgage costs from your taxable income. This is great news because this lowers your tax amount.

The tax-deductible mortgage costs are:

Fee for the valuation of your current home and your new home. Fee for the mortgage advice from the broker Part of the fee from the notary Cadastral costs regarding the mortgage deed Costs for a mortgage including NHG (if applicable) 2. Interest deductionSecondly, after taking out a mortgage on your residential home, you’ll of course pay a monthly fee. When you have a mortgage on a linear or annuity basis, this interest will be partially tax deductible. So, this means that when you own a residential home charged with a mortgage, you pay less income tax. (See also: Provisional tax refund).

3. No property tax on the profit of the sale of your current homeCompared to other countries, the Netherlands doesn’t charge any property tax when you make a profit from the sale of your home. On the other hand, a profit on the sale of your former home can limit your mortgage interest deduction on your new home (bijleenregeling). But overall, this is less drastic than paying a big amount of property tax.

4. Provisional tax refundThis refund is often considered to be a perfect way to lower your monthly cash flow. By paying mortgage interest, and / or paying costs related to taking on a mortgage, you are eligible for a tax refund. You can claim this through your annual income tax return. However, in the Netherlands you can also claim this refund monthly instead of annually. This is known as the provisional tax refund (voorlopige teruggave).

With the provisional tax refund, you calculate the expected outcome of the annual tax return in the coming year. This estimated yearly refund can be paid per month upfront. When the year is finished, and your annual income tax return is done, the results of your final income tax return and the provisional income tax return of the same year will be settled.

5. No transfer taxAre you under 35? Then you don’t have to pay transfer tax (which is 2% over the purchase price) if you buy a residential home below 440.000 euros. Of course, you can use this only one time. But this is good news, because you can save a lot of money (maximum benefit 8.800 euros).

Do you have questions about mortgages and taxes in the Netherlands? Which is the best mortgage structure for you? How can you claim these tax advantages? Feel free to contact Klår Finance for help with these topics.


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