You own a second home in the Netherlands and decide to rent it out. How much income tax do you pay on this rental income? The answer is: €0. The same applies if you make a profit on the sale of this property. This income is also completely untaxed. So do you pay no tax at all on your second home? Unfortunately no.

Tax when buying a holiday home

You pay tax when you buy the property. If it is an existing property, you pay transfer tax. The rate is currently 2%. If you buy a new home, then you do not pay transfer tax. You will then pay 21% VAT.

Municipal taxes

Every year you pay municipal taxes, such as property tax, sewerage levy, waste collection and water board taxes. As the municipality has a lot of freedom in setting the rates, these charges differ from one municipality to another.

Income tax

You also pay annual income tax on owning your second home. This is because this home is considered a source of income from savings and investments. If you own the home on 1 January, you will report the WOZ value (and any mortgage debt) in your tax return for this year. This is because the levy is based on the value of the property. The amount of rental income does not matter for the levy!

Inheritance tax

If you die, your house will inherit to your heirs. This increases their capital. They have to pay inheritance tax on this increase in assets.

Source: Taxingh Consultancy