Can I rent out the house is about you owning the house. You leave the Netherlands and would like to rent out the house. Is this possible?
Can I rent out the house?
Can I rent out the house is the frequently asked question during our webinars. Or better stated. Every webinar this is being asked. How does it go?
The moment you own the house mortgage free, debt free, you can do as you please. There is a condition set by the county, please read on that below. Your property, you can do within reason as you like, renting out is a possibility.
Most of us have taken out a mortgage to be able to purchase the house. A mortgage company is a bank. A bank is about calculated risks. The bank looks at you, your family situation, your income, steady job or not. Then the house is looked at, survey done. Based on the investigation an interest percentage is determined and other conditions.
Leaving the Netherlands
You are leaving the Netherlands, find a person to rent your house. The mortgage company does not know this person, has not done an investigation. Probably the mortgage company is not informed at all. But if they would, the conditions would have been different. Higher interest percentage, lower loan amount, or no mortgage at all.
Hence in the mortgage contract you signed is clearly stated YOU CANNOT RENT OUT THE HOUSE. If you do, you will be asked to pay back the loan in 14 days’ time, or the house will be sold on auction. You might think one way or the other, you get a nice amount for the house in this market. Not in case of auction, that is only accessible for persons or institutes that can purchase cash. As that is a small market, the value obtained is much lower. For the balance between the debts and the auction price you are personally liable.
Good mortgage advice
Good mortgage advice implies that when you can predict you would like to rent out the house, the mortgage expert can take that into account. The loan can be converted, or is already a buy to let mortgage. Clearly we know nothing about mortgages, contact the expert.
The current housing market makes cities set conditions at renting out. To protect the low income house market, up to a certain WOZ value it is forbidden to rent out the house. Every city has its own WOZ threshold, you find that on their websites. The penalty for not complying is huge. The city is active on the matter, and if that is not the city, it will be the neighbors.
Then we have the tenant choice. A random tenant could result in a drug lab installed in your house. Most tenants are not as careful as you are with the house. Will they leave the house, now an indefinite rental agreement is to be in place? Tenants are protected in the Netherlands. Have yourself assisted with an expert.
Taxation of rental income
The moment you rent out the house, the house moves to Box 3. In Box 3 we have an assumed yield (2023) of 6,17% over the WOZ value and you can take the mortgage into account for 2,28%. Over the difference between these two, you pay 32% Box 3 taxation.
Hence the actual rental income is not reported, the mortgage costs are not deductible, neither are any other costs you might have.
Currently the method of taxation in Box 3 is under discussion. Likely capital gain tax is going to be introduced in the year 2027.
The moment you move abroad, that move does not influence the taxation of the house. You become a nonresident tax payer for the house. Same tax rates and conditions apply in Box 3, but for only the house and the debt on the house.
Tax is exciting
We think tax is exciting. Renting out the house is not exciting at all. Before you can, you need to have convert the mortgage, different mortgage conditions might be applicable. You need to meet the conditions of the city and find the perfect tenant. At the end we explain you how much tax is to be paid on this adventure. Happy to do that.