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5 tips on tax-free financial help from parents to buy a first home in the Netherlands
Young adults in many countries are unable to meet the base investment needed to secure a mortgage or buy a home.
5 Tips on Tax-Free financial help from parents to buy a first home in the Netherlands
5 tips on tax-free financial help for a first home
1- A mortgage can cover up to 100% of house value but not the ~ 10% of purchase price for other costs the buyer is expected to bring to the table.
2- Parents can grant 100,800 euros tax-free (schekingsvrijstelling) to their children, aged between 18 and 40, for buying, renovating or paying the mortgage on a property in which the child will reside, as a one-time tax-free gift. The gift must be spent before 2021, and the recipient must also declare donation tax , even if the donation is tax-free.
3- Parents can give a one-time tax-free gift of 25,731 euros to be used for any purpose. The annual gift below (#4) may not be received in the same year.
4- Parents may donate a maximum of 5,363 euros tax free every year to a child aged between 18 to 40 years (120,000 euros total).
5- Anyone can gift you 2,147 euros tax free, but gifts from partners - Aunt and Uncle, are added together, and any gift that exceeds the statutory limit will incur gift tax.*
Gifting is a way for parents, grandparents and other family members to pass on a legacy during their lifetime at a time when beneficiaries may need it most. 65% of starters, aged 20-35 need financial help to buy a home (research). Always consult with your tax professional as to the best strategy for tax-free gifting in your personal circumstances.
Information in Dutch from the Belastingdienst may be found here.
*In a few steps you can determine if you have to pay gift tax here:
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