How much transfer tax do I need to pay when buying a property in The Netherlands?
We wish we could hand out free tax exemptions but the Dutch tax authority “Belastingdienst” tends to disagree. When you are buying a property here you will often have to pay transfer tax, which in Dutch is called “overdrachtsbelasting”. This article is all about how much you need to pay, what it is for different type of properties or clients and anything else important you need to know.
For buying properties that will function as a primary residence the transfer tax is 2% in 2023. However, there are two exemptions:
Under the new-build exemption, you are not required to pay transfer tax if the property is intended for residential purposes, is newly constructed and has not been occupied prior to the sale. Do realise that with new-build properties you start paying your mortgage whilst construction is taking place.
If you are buying a property up to 440.000,- euro you can qualify for a starter exemption, meaning 0% transfer tax. You will have to meet the criteria though. You need to be under 35 years of age when the transfer takes place and you have not used the starter exemption before when buying a property. In case you are buyer with a partner and one of you is above 35 and the other below, then one of you is entitled to 0% tax over 50% of the property, meaning between the two of you 1% tax will be paid. When placing a bid right up to 440.000,- euro you need to be cautious. If for example the property is not built on its own land but the land is leased from the municipality, in that case the capitalized leasehold can impact the value over which transfer tax needs to be paid and possibly push you over the threshold.
For properties that are not considered a primary residence, such as second homes, holiday homes and investment properties, the transfer tax is 10.4% in The Netherlands. A possible way to avoid this tax is to first live in the property yourself making it your primary residence and later use it as a second home or investment property.
You pay transfer tax when your notary appointment for the transfer of ownership takes place. The notary is responsible for the calculation of the transfer tax that is due. But it is smart to always check with your agent and or mortgage advisor upfront what you can expect.
Bear in mind that tax regulations can change over time. Often they are set for the coming year and towards the end of the year the government will announce any upcoming changes. It might also be smart to have a transfer take place just before or after new regulation is introduced. We saw this two years back when the starter exemption was introduced. Side effect was however that this pushed demand and prices up, so for most buyers at the time overall it ended up costing more.
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