2021 Tax Plan – Outline of landlord levy and property transfer tax | Deloitte


2021 Tax Plan – Outline of landlord levy and property transfer tax

2021 Tax Plan - Budget Day (Prinsjesdag)

The following lists the measures proposed in the 2021 Tax Plan in respect of the landlord levy and property transfer tax

18 November 2020

Outline of landlord levy and property transfer tax measures

Dutch version

Back to outline 2021 Tax Plan

First-time buyers and home-owners moving property

The government wants to increase the possibilities for first-time buyers on the housing market and home-owners moving property. To this end, a one-off exemption from transfer tax will be introduced for buyers between 18 and 35 years of age who buy their home effective from 1 January 2021. The exemption had initially been set to apply until 1 January 2026, but an amendment adopted by the House of Representatives abolishes this sunset clause. Under a second change, the exemption no longer applies if the home value (including appurtenances) exceeds EUR 400,000. This comes into effect on 1 April 2021.

Other people who purchase a home after 1 January 2021 will continue to pay the 2% rate. In order to benefit from the one-off exemption or the reduced rate of 2%, the home must serve as a buyer’s main residence and the purchaser must clearly, firmly and unreservedly declare in writing that they will be using the home as their main residence other than temporarily. The House of Representatives adopted an amendment to the effect that the 2% rate will also apply to housing cooperatives that purchase housing from housing corporations.

All other home acquisitions will be taxed at the general rate, which is to be increased to 8% on 1 January 2021 (2020: 6%). In the first place, this concerns the acquisition of non-residential property, such as industrial buildings, business premises, hotels and guesthouses, and land designated for housing. This high rate will also apply to purchasers who will not or only temporarily use a home as their main residence. This would include private investors buying a home without the intention to live in it, natural persons buying a second home or a holiday home, or parents wanting to buy a home for their children.

Related article - House of Representatives has adopted the Tax Plan 2021

Temporary increase in gift tax exemptions

The levy of gift tax includes various exemptions. Under one of those exemptions, parents can make donations to their children every year. Provided they stay within certain limits, they can make such donations without being liable to gift tax. In 2020, EUR 5,515 per child can be donated tax-free. Other acquirers are entitled to a EUR 2,208 exemption in 2020. The House of Representatives has adopted an amendment to the Tax Plan 2021, implementing a EUR 1,000 one-off increase of both exemptions in 2021. Factoring in inflation adjustment, the above exemptions are expected to amount to EUR 6,604 and EUR 3,244 respectively in 2021. The House of Representatives' wish to provide entrepreneurs with more options to obtain cash in these difficult times has prompted the increase.

Related article - House of Representatives has adopted the Tax Plan 2021

One-off rent reduction for low-income tenants

Housing corporations are obliged to propose to tenants a reduction in the agreed rent to the housing benefit capping threshold applicable to the tenant as a maximum. They should do so before 1 April 2021. However, this only applies to tenants who do not earn more than a certain standard income (depending on the situation this is capped at EUR 31,550) and who have a non liberalised tenancy agreement. In the year in which the new rent takes effect, it can no longer be increased in the regular manner (no inflation adjustment). The Tax Administration will provide the housing corporation involved with the necessary income data.

Alternatively, tenants themselves may request a rent reduction before 31 December 2021. If they do, they must then provide evidence of how high their household income is. This is particularly relevant if tenants have seen their income drop recently. If a proposal for rent reduction has wrongfully not been submitted, or if the proposal is substantively incorrect, tenants can turn to the rent assessment committee to enforce the rent reduction.

The background to this rent reduction is a re-assessment of the rent for tenants whose housing costs are too high in relation to their income. These may be tenants for whom the rented home they were allocated at the time is too expensive, or tenants who have suffered a reduction in income. It is estimated that this would involve 260,000 tenants and a rent reduction of around EUR 160 million.

To compensate for the loss of rental income resulting from this obligation for housing corporations, the landlord levy rate will be reduced by 0.036% to 0.526%. This rate reduction will benefit all landlords liable to pay landlord levy. The annual amount of the reduction is EUR 138 million.  

Amendment transitional law Estates Act 1928

The Ranking Decree Estates Act 1928 sets out the conditions a property must meet in order to qualify as an estate under the Estates Act. Recently, following an evaluation of the Estates Act 1928 (“Estates Act”), the Ranking Decree has been amended. Transitional law has now been included for the approximately six hundred estates that fail to meet the new conditions of the Ranking Decree that will apply effective from 1 January 2021. For a maximum of ten years, these estates will continue to qualify as estates under the current conditions, which apply until 31 December 2020. The amendment of the Ranking Decree could result in owners no longer meeting the requirement to maintain the property and, thus, they could still face the imposition of gift, inheritance and transfer tax on acquisitions made in the years prior to 2020. To prevent this, the government proposes a number of amendments to the transitional law.

What’s more, under the new Ranking Decree immovable property located abroad that forms part of the Dutch cultural heritage may also be designated as an estate. A previously adopted legislative amendment to this effect will enter into force on 1 January 2021.

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