No transfer tax for first-time buyers from 2021?

You’ve probably noticed that 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 so that people aged 18 to 35 who buy their first property in the Netherlands will not have to pay the transfer tax of 2% when purchasing a home.

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% of the property price.

For example, if your house is worth 350.000 euros, the transfer tax will be 7.000 euros. If the government passes the new bill, the buyer will save 7.000 euros.

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 ownership. In this case, the transfer tax is refunded.

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 be able to afford a home in the Netherlands.

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 is trying to create more opportunities for first-time homebuyers in the Netherlands.

Simultaneously, individuals who are planning to invest in 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 2%.

The Dutch government believes that buy-to-let investors and first-time homebuyers are competing for properties that belong to the same price range. By implementing this new bill, the Dutch government wants to encourage starters on the housing market to become homeowners.

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 euros will receive a tax benefit of 2%. If you plan to buy a home over 400.000 euros, you will need to pay 2% of the transfer tax. The bill will be introduced on April 1, 2021. Note: 34-years-olds and younger who plan to buy a property more than 400.000 euros between January 1, 2021, and March 31, 2021, will not pay a transfer tax of 2%.