In the Netherlands, certain costs are deductible from taxes. You can save a lot of money by knowing the items which are deductible in The Netherlands. However, which costs are deductible when buying a house? Are property valuation costs deductible?
What are valuation costs?
When you want to buy a house and take out a mortgage for it, the mortgage lender will require an independent appraisal report. So just having the house value calculated is not enough. An estate agent can calculate the house value for you; this is often a reliable value to determine the actual purchase price within a reasonable margin. An appraisal report is a more factual calculation of the value a house represents. This report must be prepared by an appraiser. And there are costs involved. Count on an average of between 450 and 500 euros for preparing a valuation report including cadastral fees, municipal fees and administration costs. Ask the estate agent about the possibilities.
When are property valuation costs deductible?
As with mortgage interest, you can also deduct valuation costs from your taxes. You can deduct these costs once from the taxable income in box 1. This means lower income tax. Other costs are deductible, which is bundled into the cost of taking out the mortgage. This is a one-off deduction consisting of:
- The valuation fee
- Advice and mediation by the mortgage advisor
- The preparation fee
- Notarial costs to prepare the mortgage deed
- Land registry costs for the mortgage deed
- Application costs for applying for the NHG
- The penalty interest
- Construction interest between signing the provisional sales contract and the mortgage deed
- Costs for a new-build deposit, renovation loan or conversion deposit
There are quite a few separate costs you have to incur when buying a property. Incidentally, the selling party will also have to incur costs. Besides determining whether these costs are deductible, it is wise to make a list of cost items in advance and put an amount on this. On average, count 2 to 3 per cent on the final purchase price. The costs you cannot include in the mortgage you will have to pay yourself, or bring them under a separate loan.
Which costs are not deductible?
Some expenses that are not tax deductible are:
- Sales tax
- Transfer tax
- Estate agent’s commission
- Maintenance and renovation costs
- Owner-occupied home debt repayment
- Bank guarantee costs for paying a deposit
Incidentally, this does not mean that the above costs cannot be beneficial. For instance, a real estate agent’s commission can be recouped immediately upon a positive outcome during negotiations on the final purchase price. Comparing rates can also make a difference; most professionals involved in home buying and selling charge different rates. So there are more benefits to be gained than just tax deductions.
What are the conditions for deductible expenses on a property?
The main condition for the above deductions is that these expenses can be claimed back once in the year they are incurred. So be on time, if you are not sure about the possibilities or the date, contact your financial adviser or discuss it with the estate agent. Otherwise, you could be missing out on quite a bit of money.