Buying a house in the Netherlands

The Dutch house market is booming, with prices up more than 16% on last year this July. Despite the effects of the coronavirus, the Dutch economy is expected to grow by almost 4% in 2021, there are more job vacancies than unemployed people for the first time ever, and mortgage interest rates are astonishingly low. 

In this heated market, where bidding over the sale price has become the norm, Blue Umbrella’s experts believe it’s even more important to know the tax advantages for purchasing a home. 

When you buy a house, you should know from the start that some of the costs you incur will be deductible against your interest. The main deductions you can make are all costs related to the mortgage and the interest that you pay: this includes the cost of a financial advisor to get that mortgage, the costs for the notary related to the mortgage, and interest payments on that mortgage. 

In the year that you buy a house, you should pass all of these costs to your accountant, to find out which costs can be declared, to gain the tax advantage you are entitled to receive. 

Interest tax relief

Once you have a mortgage, you will also benefit from mortgage interest tax relief, known in Dutch as the hypotheekaftrek. This is made as a deduction from your main income from employment and home ownership, which is known as box 1.  

It will need to be your main residence, in which you live, and you need to have a mortgage which will be fully repaid within 30 years. 

Although this benefit is gradually being reduced for people on higher incomes (to a maximum of 40% of the total interest paid per year in 2020), it can significantly reduce your monthly mortgage costs. It can also be refunded to you on a monthly basis if you apply for this option (although if the total is incorrect by the end of the year, you will have to repay any amount overpaid.) 


Beware, though: if you buy a home and live in it, the tax office also applies an imaginary income from the use of your own home to your income (the eigenwoningforfait). 

In the case of more expensive homes assessed by your municipality as being worth more than €1.1 million, this can reduce or even negate the mortgage interest tax rebate. 

If you have bought a home recently it is wise to talk to Blue Umbrella about the deductible costs which can be declared in your income tax filing!