Dutch expats using mortgage deduction if they buy own house
Expats - Mortgage Deduction - The Netherlands
If you buy as an expat real estate here in the Netherlands, the interest paid on this mortgage,( including
financing the purchase or the improvement of the house) is fully deductible from your income. The house
must be used as your main residence. Expenses related to the conclusion of the mortgage are also
deductible, such as:
Costs charged by the bank (afsluitprovisie);
Costs of the notary for registering the mortgage (not the purchase of the property itself) including
Costs of valuation;
Other costs related to the mortgage.
If you have the 30% tax ruling you can also claim these deductions. We note that because of the 30% tax
ruling your taxable income is taxed at a lower rate leading to a lower deduction. However, the normal
rates still apply.
As described above the mortgage interest is fully deductible. However, you must pay tax on the so called
“deemed rental value” (eigenwoningforfait) which is based on the WOZ value of the property. Compared
to the deduction of mortgage interest, this is in most cases a relatively low amount, namely
approximately 0,8% of the WOZ value. The value is estimated every year by your municipality by sending
you a statement. The WOZ value is also mentioned on the local property tax assessments.
In case you decide to leave the Netherlands you can sell your real estate. The profit realized on it is not
taxable here in the Netherlands. It is also possible to keep the real estate and rent it out. In that case you
will remain taxable with respect to the Dutch real estate as a non-resident taxpayer. Since, the real estate
is no longer your main residence, it will become taxable in box 3. As a result, that the mortgage deduction
is no longer possible. The net value of the real estate will be subject to e deemed return levy, which is a
tax of 1,2% of the net value of the house. On the other hand, the rental income is not taxable in box 3.
MFFA Tax Advice
Tel +31 (0) 6 4375 7868
We note that as from January 2013, new law regarding the mortgage deduction is introduced. The
mortgage interest deductions remains deductible but from this date new loans must fully paid back within
the maximum of 30 years. Furthermore, the repayment of the mortgage must be done at least according
to an annuity scheme, in order to be eligible for the interest deduction.
If you want more information with respect to the Dutch mortgage deduction, please contact MFFA Tax
Advice (www.mffa.nl) by email email@example.com or call +31 (0)85 0030140