Deducting costs of an estate agent

Buying a house is a big step for many people, and it can be a complex process in which financial considerations play an important role. An interesting aspect that some homebuyers overlook is that deducting the costs of an estate agent is possible in most cases.

> Read more about the costs of an estate agent

Deducting purchase costs

The purchase costs you incur as a buyer to buy a house are also known as buyer’s costs. Part of these purchase costs of your home can be reported to the tax authorities as a deduction. Deducting costs of a real estate agent should be done on your income tax return for the year in which you bought the house. So if you buy a house in 2023, you’ll declare the deductible costs in your tax return before 1 May 2024.

The following costs are deductible:

• The mortgage adviser’s advisory and brokerage fees
• Preparation commission (when an offer needs to be extended)
• Notary fees for the mortgage deed
• Land registry fees for the mortgage deed
• Valuation costs for getting the loan
• Costs for applying for the National Mortgage Guarantee

Are you buying a newly built house? Then the following costs are additionally deductible:

• Construction interest you paid after signing the preliminary sales contract, but before signing the mortgage deed
• Costs for the construction deposit

By adding up the above costs you incurred, you can calculate the one-off deductible costs of your own home yourself.

> Want to find out if a technical inspection is deductible? Find out right here

Other deductible costs when buying a house

Fortunately, there are also cost items that are tax deductible. These include the costs of taking out a mortgage, the interest thereon, the costs of applying for a National Mortgage Guarantee and the costs of an architectural report if this is required for the NHG application.

Yet it is not the deductible costs where the financial gain is to be made when selling a home. The real benefit lies in choosing the right estate agent. This can save you (tens of) thousands of euros extra, simply by using the right asking price, sales strategy and negotiation technique, among other things.

Conditions for deducting costs of a buying agent

Purchase agent fees can be tax deductible in some cases, but certain conditions and rules apply. In general, purchase broker fees are deductible if you are buying the house for your use, such as your primary residence. This means that if you buy a house as an investment, the costs are usually not deductible.

To make use of the deductibility of purchase agent fees, you must meet the following conditions in most cases:

1. Own property: The home you are buying must be your main residence. This means you intend to live in the property yourself and it will be your primary residence.
2. A mortgage with owner-occupied property: The cost is deductible only if you have taken out a mortgage with a bank or other financial institution to finance your home. This is called home equity debt.
3. No funding for other expenses: The deductibility only applies to costs directly related to the purchase of the home, such as the broker’s commission. Other costs, such as renovation costs, are usually not deductible.
4. Proof and documentation: Make sure you keep all relevant documentation and evidence, such as invoices and proof of payment, to prove that the expenses were incurred for the purchase of your own home.

It is important to stress that tax laws and rules can constantly change and vary by jurisdiction. Therefore, it is always wise to seek advice from a tax advisor or financial expert before including purchase agent costs in your tax return. Understanding and applying tax deductions correctly can help you make the most of the financial benefits when buying a home.

> Read more about the tasks of a buying agent

Find a buying agent directly