26 February 2021
No transfer tax for first-time buyers from 2021
Egle Kemezyte
Growth Marketer

Homebuyers aged 18 to 35 who buy their first property worth less than €400.000 gain a transfer tax exemption of 2%.  If you plan to buy a home over €400.000, you need to pay 2% of property transfer tax. The bill will be introduced on 1 April 2021.

Note: 34 years old and younger who plan to buy a property of more than €400.000 between 1st January 2021 and 31st March 2021 will not pay a property transfer tax of 2%.

What does the transfer tax exemption mean if you’re a first-time buyer?

It means that you need fewer savings to close your mortgage, and you can keep more of your savings in your pocket.  Currently, the property transfer tax (overdrachtsbelasting) is 2% of the purchase price. If you buy a residential property in the Netherlands, you must pay 2 percent of the property price on tax. For example, if your house is worth € 350.000, the tax is € 7,000. If the government passes a new bill, the buyer saves € 7,000. What was already the case is that the tax does not apply if the seller decides to sell a property within six months of ownership. In this case, the paid tax is refunded.

You can check the possible scenarios below.

Investors pay more

The housing shortage is a big problem in some Dutch cities, so by reducing the costs for first-time buyers and increasing the tax for buy to let investors, the Dutch government tries to create a more level playing field for first-time homebuyers in the Netherlands. Simultaneously, the individuals who plan to invest in real estate pay a higher fee. The initial tax of buy-to-let properties increases to 8% in 2021.

The Dutch government believes that buy to let investors and first-time homebuyers compete for the properties that belong to the same price range. Hence, the government aims to encourage the starters to become homeowners in the Netherlands.

Type of buyer Residential Other real estate
First-time buyers (age between 18-35 years) 0% 8%
Moving homes (when you buy your second property) 2% 8%

For example, if you plan to buy a commercial property, a holiday home, or a buy-to-let property, you pay 8% from the next year. If you decide to move houses, you pay a transfer tax of 2 % for the second residential property.

Mortgage closing fees in the Netherlands

When you buy a home in the Netherlands, you must pay closing fees, including a transfer tax of 2%, the cost for a bank guarantee, real estate agent, notary, translator, valuation report, bank guarantee, and mortgage advice.

Mortgage closing fees are tax-deductible in the Netherlands. You can receive a tax return on the valuation report, mortgage brokerage, and advisory and mortgage-related fees at the notary (deed of mortgage and public land records).

Do you have questions about the 2% transfer tax?