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Transfer tax. What exactly is that? It is the amount of tax that is levied on the transfer of a home. You only pay this tax for an existing home. Are you buying a new construction? Then, you do not have to pay the transfer tax.
On Budget Day (Dutch: Prinsjesdag), the government’s income from transfer and insurance tax for 2024 is estimated at 6.5 billion euros. Most likely that your purchase of a house or other real estate will contribute to this.
In view of the fact that a large part of the Netherlands will be affected by this, it is important to understand how the transfer tax works. That is why an outline is presented here with the most relevant and important information for your situation and what is going to change in 2024.
When do I have to deal with transfer tax?
Transfer tax only applies when it concerns matters that fall within the scope of the transfer tax. This is the delivery of:
- Immovable property located in the Netherlands (such as an owner-occupied home, office building, investment property, etc.);
- Rights to which these are attached (leasehold, building rights, usufruct, etc.).
Now it may be that you buy a piece of land with an item of which it is not clear whether it is subject to transfer tax because you do not know whether it concerns immovable property or movable property. Immovable properties are objects that are permanently connected to the ground and cannot be easily dismantled or moved without being destroyed. Consider, for example, only the foundation of a house or asphalt.
Services relating to real estate or rights to which they are attached are not subject to transfer tax.
Acquisition of a home is not subject to transfer tax in the following cases:
- Estate mixing
- Inheritance
- Time-barred
- Division of matrimonial property or estate, in which the acquirer was entitled as acquirer under the universal title.
Leave your details in our online contact form or call us at +31 (0)20 – 2170120 and we will get in touch to see if we can help you with filing the tax return.
What amount is the transfer tax calculated on?
Another important question is which part of the acquistion is taxed? How big is the amount and how is it calculated?
The main rule is that the acquisition price, i.e. the price you pay the seller, is used as the yardstick.
In practice, it regularly happens that a house is sold for a price that is not equal to the WOZ value (Value immovable property). Then, there may be confusion about the measure for the transfer tax. Two situations are outlined below:
- The price of a house is higher than the WOZ value: in this case, you pay transfer tax on the acquisition price of a house.
- The price of a house is lower than the WOZ value: in this case, you pay transfer tax on the WOZ value.
The amount on which the transfer tax is paid is always the highest value. In case the acquisition price is higher than the WOZ, the acquisition price is the amount over which the transfer tax is calculated and vice versa.
Exemptions
As was mentioned before, you don’t have to pay transfer tax on new constructions. But why is that?
Not in all cases transfer tax has to be paid. In cases where VAT is due, it is not desirable to additionally levy transfer tax. If there is a concurrence between VAT and transfer tax, an exemption can be granted for transfer tax under certain conditions.
Normally, the delivery of immovable property is exempt from VAT. However, new construction (immovable property not older than 2 years) and a building site are not included. This means that when buying a new-build home, you will have to deal with both VAT and transfer tax. In this case, you may be eligible for the exemption from the transfer tax.
Rate 2023
The amount of tax that must be paid depends on the transfer tax rate. The general rate has changed as of January 1, 2023.
- 10,4% (other real estate)
- 2% (owner-occupied home)
Rate 2024
In 2024 the rate isn’t changing.
- 10,4% (other real estate)
- 2% (owner-occupied home)
Starter’s exemption
From 2021, starters between the ages of 18 and 35 can buy an owner-occupied home without having to deal with transfer tax. A condition is that the starters have not previously used the exemption. Next to age, there are other things you should be aware of regarding the transfer tax:
The house acquires the function as the main residence.
Additional condition: from 1st of January, 2024, the purchase price of the property may not exceed € 510.000. Before in 2023 it was € 440.000.
The exemption is personal. Do you buy a house together, but is one of you older than 35, then that portion is taxed with 2%.
Due to the overheated housing market, the government is trying to give this group more advantage offer. However, the latter is debatable. An expected outcome of this is that house prices will rise to compensate for the transfer tax.
We are happy to help
Do you have questions regarding transfer tax? Or do you have other tax-related questions? We are happy to help! Please contact us for a free introduction using our details mentioned below.
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