Renting or buying?
The general rule of thumb to decide whether it is better to buy than to rent is whether you plan to reside
in the Netherlands for more than 5 years, and if you are (or would be) paying over EUR 1250 per month
for rental accommodation.
The reasons for this are:
· the market is not expected to stabilise for three years, so you have to be willing to make a longer term
investment;
· there are considerable initial costs attached to buying a house;
· tax deductions on the interest only cumulatively reach a "break-even" level after approx. three years
Renting
Please note that rent is not tax deductible in the Netherlands and, if your employer either pays the rent or
contributes to a housing allowance, this is taxed as a benefit.
The tenant normally pays OZB (a local tax for users of properties based on the value of the property) to
the local government separately from the yearly tax return.
Check you are using an established agency. In Amsterdam, which has its own local laws on housing,
inquire whether the estate agent has a permit issued by the local authority. For all other areas, you might
want to check whether the agency is recognised by the Nederlandse Vereniging van Makelaars
(Netherlands Association of Estate Agents).
It is standard to pay the first and last month's rent (the latter is a deposit to the landlord) and one
month's rent to the agent as fee. There can also be contract fees of up to EUR 50.
Points to check before you sign:
· whether it listed as furnished or unfurnished on the contract (fully furnished can come under the
same regulations as hotels and thus offer little protection against eviction, etc. Unfurnished gives
you more protection and rights)
· whether the contract include utilities (gas, electric, and water are often included in furnished, but
not in unfurnished flats)?
· whether you are expected to pay a portion of "shared costs" on top and what do these include/
· whether you be expected to pay the "users tax" (OZB), a yearly local tax based on the value of the
property and usually paid by the tenant?
Buying a house
Buying a house can offer very good tax deductions and benefits. The points below outline the general tax
implications for homeowners, however, they are meant as a general guideline only as individual
circumstances will vary:
· interest payments on mortgages are tax deductible if the property is used as the primary
residence;
· expenses relating to the closure of the mortgage and house registration are tax deductible;
· increases in the value of the house are tax free (if primary residence);
· tax will be levied on the "deemed rental value" of the house (compared to deductions allowed for
interest, this amount is normally quite low);
· there is also a property tax (WOZ) paid yearly to the local government which is based on the value
of the property;
· if you leave but continue to own the house, the tax deductions above disappear and the property
is then taxed under Dutch tax Box 3 ( a tax of 1.2 percent of the net value of the house); |
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