Tax consequences of renting out your house

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In the current housing market it can be worth keep your house in the Netherlands while you leave the Netherlands, but what are the tax consequence of renting out your house?

Owning a house in the Netherlands

If you own a house in the Netherlands often you took out a loan (mortgage) to pay for the house. The house is regarded a source of income for the Dutch tax office. Against this source of income you can deduct certain costs. The source of income is 0,75% of the WOZ value, that is added to your income.

You can deduct against this source of income the mortgage interest, the notary costs related to the mortgage, the mortgage advisor costs, the valuation of the property for obtaining a mortgage and the building survey if demanded by the mortgage provider.

A quick calculation learns you that the costs exceed the income, hence the Dutch tax office may consider the house to be a source of income, but in fact it is a deduction for you.

Tax consequences of renting out your house
Tax consequences of renting out your house

Tax consequences of renting out your house

The condition of the mortgage deduction is that you are living in that house. Hence the moment you are no longer living in the house, but renting it out, you would assume it to have become a true source of income, but not according to the Dutch tax office. The house is then no longer a source of income and will move to Box 3. That implies you can no longer deduct the mortgage interest.

The house has moved to Box 3 and in Box 3 the actual income is not taxed. That implies the rental income is not reported (and the mortgage costs not deductible). However, taxed is the value of the house minus the debt you took out to purchase the house. The value is determined by the city via the so called WOZ value. The debt is the debt with the mortgage bank.

Tax consequences of renting out your house
I have the 30% ruling – no assets to be reported  – not?

Indeed not. The exception to the 30% ruling rule that you do not need to report your worldwide assets is property situated in the Netherlands. Hence even a 30% ruling holder needs to report Dutch property.

Tax consequences of renting out your house
I have left the Netherlands – no Box 3 – not?

Indeed not. The moment you leave the Netherlands and you still own a property in the Netherlands, you have become a non-resident tax payer for that property and for that property only. So you pay Box 3 tax as described above. But if you also still have Dutch bank accounts, those you do not report as a non-resident tax payer cannot be taxed for bank balances kept on in the Netherlands.

Orange Tax Services

Being a home owner can imply multiple situations in the Dutch income tax return. If you live in the house, you can deduct the costs, if you rent out the house, the house is taxed in Box 3 and if you have left the Netherlands but still own a property, you are still taxed in the Netherlands. We can help you file a correct income tax return. Feel free to contact us.