5 THINGS TO CONSIDER WHEN INVESTING IN REAL ESTATE

The world of property investments has changed rapidly in recent years. Whereas it used to be very interesting to buy properties – with an investment mortgage for rent, for example – new rules and regulations are making it harder (but certainly not impossible!) for new investors  to enter the market. In this blog we highlight 5 things you should know about when investing in property, the most recent changes and things that still make real estate investments attractive.

The transfer tax is going up
Are you buying a house for your own residential purposes? Then the transfer tax is 2%. Buyers who are younger than 35 and purchase a property worth under € 400,000 are exempt from transfer tax (0%). For ‘professional’ purchases, the rate is much higher. Previously, there was a small increase from 8 to 9% if the purchase was not a ‘first time home’ with a certain value. The Spring Memorandum now shows that the transfer tax will increase to 10.1% as of 1 January 2023. This transfer tax is paid on real estate in which the buyer is not going to live himself. This concerns, for example, a second home, holiday home or business premises. This amount creates a considerable additional sum on top of the purchase price to be paid. With these regulations, buying properties on a large scale becomes less attractive. In this way, the government hopes to offer private buyers and investors a chance to buy a property.

Buy-out protection
As of 1 January 2022, the “buy-out protection” law came into effect. The buy-out protection ensures that certain houses can only be bought for buyer occupation. Houses with a fixed value can no longer be bought for rental purposes. This buy-out protection is regulated per municipality and can therefore differ per city or area. For example, in Amsterdam the limit has been set at € 512,000, in The Hague it is € 355,000. There are several, but two important, conditions under which a property can still be bought in order to let it; renting it out to immediate family members (parents, children, brothers and sisters) and when the owner of the property is traveling for a longer period of time. Renting out a property without a licence can lead to a hefty fine.

Buying a home for your child
The increased rate of transfer tax unfortunately also applies in this situation. Nevertheless, buying a home can still be a great investment and provide a solid return. The previously discussed buy-out protection does not apply if the buyer of the property has applied for a permit to rent out the property to first-degree relatives. A major advantage is that the rent obtained remains untaxed. In addition, financial constructions such as a family bank mortgage may provide a tax advantage. Should you have any further questions on this, we would be pleased to refer you to a reliable financial advisor.

A holiday home
A somewhat similar situation is the purchase of recreational real estate. In addition to a nice return in the form of an addition to your retirement, the enjoyment of your own holiday home can of course also be pleasant for your own use. Here too, the rental income is untaxed. However, there are a number of criteria that must be taken into account when renting out a holiday home. For example, each municipality differs as to whether a holiday home may be let to private individuals. Legislation and regulations should therefore be carefully researched in advance. In addition, costs such as mortgage interest, taxes and ground lease are not tax deductible. The consultants at Von Poll Real Estate can advise and assist you with investing in and purchasing a holiday home in any region.

Are you looking for a holiday home abroad? Through our international network, we will be pleased to put you in touch with a Von Poll office in Spain or Italy, for example.

The right time for an investment is now
Have you been considering investing in property for some time? The advisors at Von Poll Real Estate will be pleased to advise you, for example on the stricter legislation. We are also thinking about the transfer tax, which is to be raised from 8 to 10.1%.

At Von Poll Real Estate, we are always on the lookout for the perfect places to live! We look for the best opportunities to purchase and/or invest to create these places.  With our enthusiastic qualified estate agents and advisors, we are ready to assist you in your search and provide you with all the information you need to make a profitable investment in real estate.