Maximize Your Tax Refund: Essential Deductions for Dutch Homeowners

As the Dutch tax season is underway, homeowners have valuable opportunities to reduce their taxable income through specific deductions. Understanding and applying these can lead to significant tax refunds.​

Key Tax Deductions for Homeowners

 

1. Mortgage Interest Deduction: Homeowners in the Netherlands can deduct the interest paid on their mortgage from their taxable income, provided the loan is used for purchasing or improving their primary residence.​ A requirement is that the loan is paid off in a maximum period of 30 years on either an annuity or linear repayment scheme.

 

2. One-Off Tax-Deductible Mortgage Costs: When purchasing a property, several one-time expenses are tax-deductible in the first year, including:

 

• Mortgage advisory and brokerage fees
• Notary fees related to the mortgage deed
• Valuation costs for the property
• Costs for obtaining National Mortgage Guarantee (NHG) if applicable
• Mortgage deed registration fees

 

These costs can be substantial and claiming them can result in a significant tax refund if the first year when you own the property.

 

3. Provisional Tax Rebate: Instead of waiting for the annual tax return at the end of the year, homeowners can apply for a provisional tax rebate “voorlopige teruggaaf” to receive anticipated deductions monthly. This is particularly beneficial for first-time buyers who have made significant one-off costs or in times like now when the interest rates are considered a bit higher so the refund is larger.

 

Tips for Accurate Tax Filing

 

While the Dutch tax authority provides pre-filled tax returns, it’s crucial to verify and if necessary, correct the information, especially concerning mortgage details and deductible one off mortgage costs.

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In your first year owning a property you can file a provisional rebate and claim the estimated interest you will be paying that year as well as the one off mortgage costs. As mentioned earlier it can be paid out to you on a monthly basis. Do be aware that clients who bought a property somewhere more towards the middle of the year, that in the year after the first you will also need to manually file a provision tax rebate with the estimated interest paid in the second year, which is a full year. The Dutch tax authority does not automatically consider this, so if you forget to manually change your provisional tax rebate then you will suddenly get a whole lot less.

 

If you bought a property together with your partner you will automatically become fiscal partners. This also means you can allocate the interest tax rebate to one person or the other or combination of it. This is the final section of applying for the tax rebate and often allocating it to the partner earning less leads to a higher tax rebate, unless that partner is hardly paying any taxes to begin with. 

 

Consult a Professional Tax Advisor: Tax regulations can be complex. Getting advice from a tax advisor can ensure all eligible deductions are claimed.​ Half of clients use a tax advisor.

 

At Independent Expat Finance, we specialize in assisting expats with the Dutch mortgage and tax systems. Our experts can guide you through the process of claiming all relevant deductions but we do not file your actual taxes, this is something you will need to do yourself or via a tax advisor.

 

Contact us today to ensure you’re maximizing your tax refund and making the most of your homeowner benefits in the Netherlands.

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For personalized advice and to explore the best mortgage options available, contact Independent Expat Finance today.