Netherlands Property Tax Guide

Netherlands property taxation — WOZ (Waardering Onroerende Zaken) valuation determines eigenwoningforfait (home ownership benefit), mortgage interest deduction (Hillen phase-out means full deduction for high-value homes), overdrachtsbelasting (transfer tax 10.4% for investors, 2% for owner-occupiers), rental property taxed in box 3 at 36% on deemed return, new-build VAT (21% with land component exempt), and non-resident property tax in box 3 without allowance.

Eigenwoningforfait (home ownership benefit): A percentage of the WOZ value (municipal property valuation) is added to box 1 income as a deemed rental benefit. The percentage ranges from 0.35% to 2.35% depending on the WOZ value (2026): up to €75,000 — 0.35%; €75,001–€1,330,000 — 0.45%; above €1,330,000 — 2.35%. For a home with WOZ value of €500,000, the forfait is 0.45% × €500,000 = €2,250 added to box 1 income. This is taxed at the box 1 rate (up to 49.5%).
Mortgage interest deduction (hypotheekrenteaftrek): Mortgage interest on the primary residence is deductible from box 1 income at the progressive rate. The deduction covers interest on loans used to acquire, maintain, or improve the home (not for other purposes — that would be box 3 debt). The loan must be annuity-based (aflossingsvorm) with full repayment within 30 years to qualify — interest-only loans taken after 2013 do not qualify for the deduction. Loans existing before 2013 are grandfathered (but annexes for new borrowing must be annuity-based).
Hillen cap (Wet Hillen) — phased out: Until 2019, if the eigenwoningforfait was less than the mortgage interest deduction (i.e., the net effect was negative), the excess was deductible as a separate box 1 deduction. This "Hillen cap" has been phased out from 2019 to 2048 — reducing the deductible excess by 6.67% per year. From 2026, owners of a low-WOZ home with high mortgage interest can deduct approximately 60% of the excess (reduced from 100% in 2018). Owners of debt-free homes with high WOZ values now pay tax on the full eigenwoningforfait — Dutch policy is shifting toward taxing imputed rent from the primary residence.
Maintenance and improvements: Maintenance costs for the primary residence are not deductible (the eigenwoningforfait is deemed to cover maintenance costs). Costs for improvements and renovations that increase the property's value are capitalised (added to the cost basis for future capital gains). The cost basis of the home is relevant only if the home is sold and the owner moves abroad (or ceases to occupy it as eigen woning).

Selling the Primary Residence

No capital gains tax on primary residence: Gains on the sale of the owner-occupied home are tax-free — the Netherlands does not tax capital gains on the eigen woning. This applies regardless of the gain amount or frequency of home moves.
Ownership cost basis (eigenwoningverklaring): The cost basis (verkrijgingsprijs) of the home is the purchase price plus capitalised improvements. This basis is adjusted when selling — but since the sale is tax-free, the basis is only relevant for determining the deemed interest deduction recapture if the owner has made mortgage prepayments.

Transfer Tax (Overdrachtsbelasting)

Rate for owner-occupiers — 2%: Individuals buying a home to live in (eigen woning in box 1) pay 2% overdrachtsbelasting on the purchase price or the WOZ value (whichever is higher). This rate applies from 2021 (reduced from 6% to 2% for owner-occupiers as a stimulus measure). The rate applies to the full purchase price — there is no threshold exemption.
Rate for investors — 10.4%: Buyers who are not acquiring the property as their primary residence (investors, buy-to-let landlords, second-home buyers, companies) pay 10.4% overdrachtsbelasting (2026). This higher rate was introduced in 2023 to cool the investment market. The rate applies to the full purchase price. The higher rate also applies if the buyer has used the 2% exemption within the previous 6 months (anti-flipping rule).
Exemptions: Buyers under 35 purchasing a first home are exempt from overdrachtsbelasting up to a purchase price of €510,000 (2026, indexed annually). Above that threshold, the full 2% rate applies to the entire purchase price. The exemption is available once per person. The buyer must intend to live in the home (eigen woning). This exemption has significantly boosted first-time buyer purchasing power.
VAT vs overdrachtsbelasting — new-build property: New-build residential property (nieuwbouw) is subject to 21% VAT on the construction cost. The land component is subject to overdrachtsbelasting (2% for owner-occupiers). The developer typically charges 21% VAT on the total purchase price and remits the land component separately to the Belastingdienst. The buyer pays both VAT and overdrachtsbelasting on the combined purchase. Existing property is exempt from VAT (the sale of existing buildings is exempt under the BTW system) — only overdrachtsbelasting applies.

Investment Property — Box 3

Second homes and rental properties — box 3: Property that is not the owner's primary residence (second homes, buy-to-let, inherited property not occupied) is a box 3 asset (overige bezittingen) subject to the deemed return tax. The WOZ value is included in the box 3 asset base. The deemed return on "other assets" is approximately 6.04% (2026 provisional), taxed at 36% — giving an effective tax rate of approximately 2.17% of the WOZ value annually. The tax-free allowance (€57,000 per person) reduces the taxable base if the investor's total box 3 assets are below the threshold.
Mortgage on investment property — box 3 debt: A mortgage on an investment property is a box 3 debt (schuld) deductible at the deemed interest rate (~2.47% in 2026). The net box 3 calculation is: (WOZ value at 6.04% deemed return) — (mortgage at 2.47% deemed return) = net deemed return, taxed at 36%. This means highly leveraged investment properties can have a much lower effective box 3 tax than debt-free properties.
Rental income — not directly taxed: Under the box 3 system, actual rental income from the property is not directly taxed — only the deemed return on the WOZ value is taxed. This can be advantageous in strong rental markets (where the actual return exceeds the deemed return) but disadvantageous in weak markets. This is a key difference from most countries, which tax actual rental income.
Property in BV — alternative structure: Holding investment property through a BV moves the property from box 3 (personal wealth tax) to the corporate tax regime. The BV pays corporate tax (25.8%) on actual rental income (less costs, mortgage interest, depreciation). Distributions from the BV to the shareholder are taxed in box 2 (24.5–31%). The BV structure is generally beneficial for high-value properties where the box 3 deemed return (2.17% of value) would exceed the corporate tax cost. Professional advice is essential given the 10.4% overdrachtsbelasting when transferring the property into the BV.

Non-Resident Property Taxation

Box 3 on Dutch real estate: Non-residents who directly own Dutch real estate are subject to box 3 tax on the WOZ value. The deemed return is calculated at the standard rates (6.04% × 36% = 2.17% of WOZ value). Non-residents cannot claim the tax-free allowance (heffingvrij vermogen) — the full deemed return on the property is taxed. This makes Dutch real estate tax-heavy for non-residents compared to residents (who can offset the allowance against the property value).
Withholding tax on rental income — no: There is no withholding tax on rental income paid to non-resident landlords. The non-resident landlord files a Dutch income tax return (box 3) annually, reporting the WOZ value and paying the deemed return tax.
Overdrachtsbelasting for non-residents: Non-residents pay the same overdrachtsbelasting rates as residents: 10.4% for investors, 2% for owner-occupiers (if they intend to live in the property — but for non-EU/EEA residents, banks may require higher deposits). The first-time buyer exemption is available to non-residents under 35 buying their first Dutch home (regardless of nationality).

Property Taxes — Municipal and Water

OZB (Onroerendezaakbelasting): Municipal property tax paid by both the owner (eigenaar) and the user (gebruiker) of the property. Owner OZB: approximately 0.1–0.3% of WOZ value annually. User OZB: approximately 0.1–0.2% (business use only — residential user OZB was abolished in 2006). Rates vary by municipality. OZB is a deductible expense for investment properties (but not for the primary residence — it is considered a personal expense).
Water board tax (waterschapsbelasting): Property owners pay waterschapsbelasting (water board tax) for flood protection and water management. The rate is typically €200–€600 per year depending on the property's WOZ value and the water board region. This is deductible for investment properties.
Sewerage charge (rioolheffing): Municipal charge for sewage collection and treatment. Typically €200–€400 per year for a home. Deductible for investment properties but not for the primary residence.

For personal tax filing and box 1/2/3 interaction, see our Personal Tax Guide →. For cross-border buyers of Dutch property, see our Cross-Border Tax Guide →.