On the third Tuesday of September, the million note is read out in the Netherlands. This contains the most important changes for the housing market, among other things. This year, the cabinet is not taking any drastic measures to reform the housing market. However, the taxation of real estate investment will be increased through several measures. The mortgage deduction will be further reduced in 2023. This has major consequences for real estate investors, and that’s why we dedicated this article to tax changes for real estate investors in the Netherlands. 

tax changes for real estate investors

Increasing the vacancy rate

The vacant value ratio ensures that the valuation of properties leased by private individuals that are taxed in Box 3 and through the Inheritance Tax Act considers the pressure on the value that leasing real estate entails. Importantly, the tenant enjoys rent protection. The discount does not apply to recreational property or business property. The vacant value ratio is a percentage multiplied by the WOZ value of the leased property to arrive at a “discount” on the value. This percentage is based on the annual rent. The vacancy rate will be increased by 2023 until the vacancy rate is abolished altogether. This is expected to happen in 2024. As a result, an average of 33% more tax in box 3 must be paid on a rented home.

Temporary leases will be excluded from the application of the vacancy rate as of Jan. 1, 2023. For residential rentals, a contract up to two years will be considered temporary. For rental of a room, the contract may last up to five years. If there is rental to family members, the possibility of applying the vacancy value ratio will cease. The basic assumption here is that in the case of letting to an associated person, a conscious choice is usually made by the landlord himself to charge a lower than market rent. A downward revaluation is not considered appropriate in such cases.

Transfer tax increase in 2023

The transfer tax rate for real estate that does not qualify as owner-occupied housing will increase from 8% to 10.4%. Therefore, if you invest in real estate, you will always face a higher tax rate starting in 2023. The transfer tax rate was already changed to 8% in 2021. However, first-time buyers buying a home for their own use will pay only 2% transfer tax. In 2023, investors will pay 2.4% more than in 2021, which directly causes higher costs when buying property in 2023.

Abolition of landlord levy

Do you own more than 50 rental properties whose monthly rent does not exceed the rent allowance limit? Then landlord levy is due. As of January 1, 2023, the landlord levy will be abolished. In practice, this levy is paid almost entirely by the housing corporation sector and some investors. The levy was introduced in 2013 during the economic crisis as a temporary measure, but is expected to be no longer necessary in 2023 to stimulate the real estate market.

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