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Owning a residential property and Box 3 – tax wise


Owning a residential property and Box 3 is a topic not always best understood. What are the tax aspects related to such a property.

Owning a residential property an Box 3

If you own a Dutch residential property that is not your main residence, then this property is to be reported in the Box 3 wealth tax box. Recently renamed the horror box.

The moment you own a property that is your main residence, then this property is in Box 1. Box 1 implies the residential property is seen as a source of income. However, often the mortgage interest exceeds the assumed income, resulting in a deduction.

Whether you live in the Netherlands or abroad, if you own a residential property not used as your main residence, you are subject to Box 3 taxation.

Some examples

You use to live in the house, but you moved to another house in the Netherlands. Then during a limited period of time you had two houses at your disposal. During that period you can report both houses in Box 1, if you truly have the intention to move your residence.

Then after you moved, the first house can still be in Box 1 under the condition it has been put up for sale. During a two year period you can deduct both the mortgages, if put up for sale.

The moment you stop putting the house for sale and or you rent out the house, the house is in Box 3 taxed.

The same applies if you move out of the Netherlands. You leave the Netherlands, you leave your house empty and put it up for sale. Then you can deduct the interest. As there is no more income earned by you, the interest deduction is taken from the previous tax year.

However, if you left the Netherlands and you did not put the house up for sale. You actually had no idea what you would do with the house, then it instantly moves to Box 3. Having a tenant or not, does not influence taxation in Box 3.

Owning a residential property and Box 3 – tax wise
Owning a residential property and Box 3 – tax wise

Capital gain tax

The question we receive a lot recently is about capital gain tax. People that have left a decade or more, suddenly see the horror box and decide to sell the property. Is the capital gain taxed? No, it is not, as we do not know the concept of capital gains. Did you file all the non resident tax returns we wonder.

Tax is excting

We think tax is exciting. Owning a house in the Netherlands not used as your main residence is no longer exciting. The taxation is heavy, more than you expect. Maybe already have the tax calculations, so you learn now that the tax is maybe more than the rent received. That bad Box 3 taxation can be.



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