Owning a monument implies you are living in one of the more beautiful houses in the Netherlands. Or soon that is, as you still have to do the maintenance. Maybe you own an apartment in a monument or you might even own a monument you rent out to others. Regardsless of how you own the monument, the costs related to maintenance monument are tax deductible. There are criteria to be met.
Monument deductible costs
While we file the tax returns of our clients, we are sometimes surprised with the announcement that their house is a recognized monument. Hence we are presented with a list of costs made, with the request to deduct those costs. It is not that simple.
Maintaining or restoring a monument involves a substantial amount of money as only the best works men can do the job. These jobs are not for the general building labourers, the experts are doing these jobs. Expertise comes with a price. Also the materials used will not be the cheapest. Therefore we recommend to ask the opinion of the tax office before you start.
Opinion tax office about the costs
Deductible are the maintenance costs necessary to restore the building to usable state or to maintain in a usable state. For instance the kitchen needs to be replaced. The kitchen in 1747 had different appliances than the one in 2015. Can the full replacement be regarded maintenance? The bathroom in 1805 might have been unattractive for us now, can you simply install a bathroom with running water, heated? The roof was not insolated, can you do that now and deduct the costs as maintenance?
I would not know the answer to that question. The amount of costs involved would make us suggest to contact the department of the tax office about monuments to ask their opinion about the budget what is deductible and what not. With this opinion upfront the costs in the end can be different, but the items that are deductible and the items not deductible have been determined already up front.
Simply presenting a list with costs you think are maintenance and therefore deductible is a gamble. A gamble we will process, but that can result in an audit over time.
Tax office can even deny the costs in full
This situation happened in Rotterdam, even though fully bombed in the second world war apparently there is still a monument warehouse. In that warehouse this lady purchased an apartment. That apartment was immediately restored and the EUR 10.806 costs claimed for monument maintenance was denied by the tax office. This case went through all courts with the result that the facts and circumstance have indeed shown that it was actually the seller of the apartment who made the costs of the monument. This implies that these costs were part of the purchase price of the apartment. The purchase price is not a deductible cost. In other words, you need to have made the costs of the maintenance yourself or the group of owners (VVE) of the apartment need to have made the costs themselves to be able to qualify for a deduction. Rather obvious, but in this case it was less clear who paid for what when.
If we understood correctly, the tax advising costs in this matter amounted to EUR 35.326 over the years this case when to the Rechtbank (court), Hof (higher court), Hoge Raad (Highest court), back to Hof to get decided. Out of that amount EUR 10.883 was accepted as costs related to the tax position of monument costs and therefore deductible. Proving a point can come at a cost.
What is deductible?
Deductible are 80% of the maintenance costs and can only be taken into account when the registration number of the monument is mentioned in the deduction request in the tax return. There is no difference in the fact that the house is your main residence (Box 1) or that you have rented the house out (Box 3).
We can assist you, or your VVE (joint owners of the building) with obtaining the approval for the costs from the tax office before you start the renovation.