Tax implications of renting out

If your home is still for sale, you can consider  renting out your primary residence. Next to the fact that you need permission of your bank, this can have far-reaching tax implications and it is important that you are well informed.

Box 3 (Saving and investments)

Please find more information about the Dutch tax system on Wikipedia or at the website of the Belastingdienst.

If your house is for sale mortgage interest deduction is still allowed during the first three years. Your home will remain in box 1 of the income tax (wages and private residence). If you rent out your home, it will move to box 3 (income from saving and investments). From that moment onwards home mortgage interest deduction is no longer possible.

In box 3 you will state both the value of the property and your mortgage. The balance hereof will be charged with a tax on the return on capital (1.2 %). The rental payments are free of tax.

After the rental period your home will remain in box 3 and you are not allowed to apply home mortage interest deduction.