No transfer tax for first-time buyers from 2021

No transfer tax for first-time buyers from 2021

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IMPORTANT UPDATE TRANSFER TAX 2021

The Dutch government announced an extra condition for first time home buyers. Only starters who buy a home under €400.000 will receive a tax benefit of 2%. If you plan to buy a home over €400.000, you will need to pay 2% of the transfer tax. The bill will be introduced on 1 April 2021.

Note: 34 years old and younger who plan to buy a property more than €400.000 between 1st January 2021 and 31st March 2021 will not pay a transfer tax of 2%.

You probably noticed that the prices of properties in the Netherlands have increased in the last few years. To help first-time homebuyers, the Dutch government plans to change the regulation that people aged 18 to 35 who buy their first property in the Netherlands will not pay the transfer tax of 2% when purchasing a home.

 transfer-tax-changes-netherlands-2021

What does it mean if you’re a first-time buyer?

It means that you will need fewer savings to close your mortgage, and you can keep more of your savings in your pocket.  Currently, the transfer tax (overdrachtsbelasting) is 2% of the purchase price. So, if you buy a residential property in the Netherlands, you must pay 2 percent of the property price. For example, if your house is worth € 350.000, the transfer tax will be € 7,000. If the government passes a new bill, the buyer will save € 7,000. What was already the case is that the transfer tax does not apply if the seller decides to sell a property within six months of the ownership. In this case, the transfer tax is refunded.

You can check the possible scenarios below.

 Name Age1st /2nd home buyerProperty tax
Situation 1: Kate is single and planning to buy her first property in the NetherlandsKate34 1st home0%
Situation 2: Kate and John are planning to buy their first home together.Kate
James
37
33
1st home
1st home
2%
0%
Situation 3: Kate and John are 33 years old and they planning to buy their first property together. Kate
John
33
33
2nd home
1st home

2%
0%

Investors will pay more

The housing shortage is a big problem in some Dutch cities. By reducing the costs for first-time buyers and increasing the tax for buy to let investors, the Dutch government tries to create more opportunities for first-time homebuyers in the Netherlands. Simultaneously, the individuals who are planning to invest in the property will pay a higher fee. The transfer tax for buy to let will increase to 8%. Currently, the transfer tax for buy-to-let properties is two percent.

The Dutch government believes that buy to let investors and first time home buyers compete for the properties that belong to the same price range. By implementing a new bill, the Dutch government would encourage the starters to become homeowners in the Netherlands.

 Residential homeOther real estate
First- time buyers ( age between 18-35 years) 0% 8%
Moving homes ( when you buy your second property) 2 % 8%

For example, if you plan to buy a commercial property, a holiday home, or your third property, you will pay 8% from the next year. If you decide to move houses, you will pay a transfer tax of 2 % for the second residential property.

Mortgage closing fees in the Netherlands

When you buy a home in the Netherlands, you must pay closing fees, including the transfer tax of 2%, the cost for a bank guarantee, real estate agent, notary, translator, valuation report, bank guarantee, and mortgage advice.

Mortgage closing fees are tax-deductible in the Netherlands. You can receive a tax return on the valuation report, mortgage brokerage, and advisory and mortgage-related fees at the notary (deed of mortgage and public land records). If the Dutch government implements the new law, first-time buyers will have more chances to afford a home in the Netherlands.

If the bill passes, the implementation is on January 1, 2021. Let’s keep our fingers crossed. Feel free to reach out if you have any questions.