As a result of the low interest rates on savings accounts, many people start looking for ways to get better yields on the money they've saved up. Investing in a holiday home is a smart move that combines the practical with the pleasant. It is important not to lose sight of a number of fiscal aspects.
Holiday accommodation on your tax declaration form
If you don't reside at your second accommodation permanently, it belongs to the 'box 3' capital of your tax declaration form. This means that your actual income and expenses related to the holiday accommodation don't factor in with your declaration. The amount that is taxable is a fictive yield on the WOZ value of the accommodation. This fluctuates between 2.871% en 5.39% in 2017. The amount is decreased by any debt it is associated with.
Second accommodation abroad
Do you own a holiday accommodation abroad? You will usually be able to use the 'deduction for assets taxable abroad' regulation in The Netherlands. This prevents having to pay double taxes. The taxation usually takes place in the country where the accommodation is located. It is important to get properly informed about this ahead of time.
VAT on revenue from the holiday accommodation
If you own one holiday accommodation and rent it out, the income revenue service does not consider you to be an business owner. This is different when it comes to VAT: you will pay 6% VAT for the rental revenue. On the other hand, you get to claim VAT returns for costs and purchases you made. This usually results in a return. If you make partial private use of your holiday accommodation and rent it out for the remaining time, the VAT is calculated proportionally. For instance, if you reside at the accommodation for one month per year, 11/12 part of the VAT is deductible. If you would like to avoid this, you could have all of the rent handled by an intermediary. This will mean, however, that you will have to pay rent during the period in which you occupy the accommodation, something that might make the arrangement less interesting.
Realistic example holiday accommodation
- You invest €150,000 in a finished, furnished holiday accommodation using your own capital.
- Total costs:€ 7,500 (including municipal taxation, insurances and deductions)
- 25 rental weeks per year
- Average rental price €600 per week
- Annual revenue: €15,000
- What remains: €7,500, amounting to 5% of your €150,000 investment
Even after the 'box 3' taxation, you are left with a hansom amount!
This shows that investing in a holiday accommodation is a smart way to get more returns on your savings. In addition, you will save money on your own vacation, which is a great added benefit!