The fiscal aspects regarding your vacation home
Have you decided to buy a vacation home? Your personal situation plays an important role in the purchase of a vacation home in the Netherlands. We advise you to dive into the specific fiscal aspects that apply to you in advance. We believe that time is your most precious asset and that you should use it well. On this page, you will find an overview of all rules regarding income tax and sales tax (VAT). We advise you to always discuss your personal situation with your own tax advisor.
Sales tax (VAT)
If you buy a recreational home on Drentse Weelde, you will buy the recreational home including VAT. You can reclaim this VAT. How? We are happy to explain that to you below. You can reclaim the VAT charged on the purchase from the tax authorities. This depends on how the recreational home is used:
➤ Full rental - The first option is full rental of your vacation home. You rent out the vacation home to a tenant all year round. When you rent out your vacation home, the tax authorities consider you a business owner. Therefore, it is possible to reclaim the sales tax paid on the vacation rental from the tax authorities.
➤ Full personal use - Would you rather only use the property yourself? Then, according to the tax authorities, you are not a business owner. Therefore, you cannot reclaim the sales tax from the tax authorities.
➤ Combination of rental and personal use - The last option is that you partly rent out the vacation home and partly use it yourself. You can then reclaim part of the sales tax from the tax authorities. The amount of this amount depends on how often you use the vacation home yourself per year. You determine this percentage when you purchase your vacation home. This is done in consultation with us. It is recommended to check this percentage with the estimated percentage at the end of the year.
After you have purchased the holiday home, you must declare the holiday home annually on your income tax return. The holiday home and the mortgage debt attributable to it belong to the yield basis of box 3.
The tax amount is determined based on the value of the possessions and debts attributed to box 3 on January 1 of the year in question. Then, after applying the levy-free assets (€57,000 per person in 2023), a notional return is determined by means of a percentage based on the value of your box 3 assets. You will then pay 33% tax on this notional return (rate 2023).
In contrast to VAT, whether or not you use the property yourself has no effect on the income tax payable in box 3. Even if your return on the recreational home is higher than the stated notional return, you do not owe more income tax. If you generate a sales profit when you sell the vacation home because the value of the vacation home has increased, then you do not pay income tax on this.
Currently, due to an objection procedure surrounding the box 3 levy as of 2017, a change in the law is imminent. The outcome of the remedial legislation is not yet clear.
The above percentages are based on the known data mid 2022 and are expected to change, for an exact calculation of the box 3 levy in your personal situation you should contact your own tax advisor.
There are many things involved in buying a vacation home in the Netherlands. It can bring you a lot of joy and returns. It is very important to be well informed in advance about all the fiscal aspects involved. Do you have any additional questions? Please feel free to contact us!