For many expats settling in the Netherlands – particularly in urban centres like Amsterdam, Utrecht and Rotterdam – securing a suitable home is among the most daunting aspects of relocation. Beyond the highly competitive housing market, expats must navigate a complex landscape of financing options, tax implications and compulsory insurances. As a senior tax advisor with over 15 years of experience guiding expats through Dutch tax law, I offer below a concise guide to understanding the key fiscal elements of purchasing a home in the Netherlands.
The home-buying process typically begins with engaging a real estate agent (makelaar) and arranging a mortgage (hypotheek). Dutch banks offer a range of mortgage products, and expats with sufficient income and residency status are generally eligible. According to recent legislation, a mortgage is only tax-deductible if used to acquire, maintain or improve the primary residence. Notably, interest on loans taken out for other purposes (e.g., purchasing a second home or funding renovations beyond property value enhancement) is not deductible.
Upon purchasing a home, buyers face several transaction costs, many of which are not tax-deductible. These include notary fees, transfer tax (generally 2% of the purchase price for owner-occupants), and valuation/appraisal costs. However, the following mortgage-related costs are deductible for income tax purposes under Box 1 of the Dutch tax system:
- Mortgage interest (on a qualifying primary residence)
- Mortgage advice and arrangement fees
- Notary fees for the mortgage deed
- Valuation report fees
For example: suppose an expat buys a home in Utrecht for €500,000 and takes out a €400,000 mortgage. If their annual mortgage interest is €12,000 and deductible arrangement and appraisal costs total €3,000, they can deduct €15,000 in the year of purchase. Assuming a marginal (and maximum) income tax rate at which deductions can take place in 2025 of 37.48%, this amounts to a potential tax saving of €5,622.
Rather than waiting for the annual tax return to claim this deduction, homeowners can request a provisional refund from the Dutch tax authorities (Belastingdienst). This results in monthly reimbursements based on estimated deductible costs – significantly easing cash flow throughout the year.
Home ownership also introduces new insurance obligations. Most mortgage lenders require at least a home insurance policy (opstalverzekering) covering the structure against fire, storm or flood damage. Contents insurance (inboedelverzekering) is highly recommended, particularly in city centres where break-ins and water damage are more common. In some cases, life insurance (overlijdensrisicoverzekering) may be mandatory, especially for high-value loans or single-income households.
Final thoughts
While the Dutch housing market can seem overwhelming, a well-informed approach to financing and taxation can offer significant benefits. Understanding the deductibility rules, leveraging the provisional tax refund, and ensuring the right insurance coverage are all crucial elements of a sound financial housing strategy. At Cappon Tax Consultants, we specialise in guiding expats through this process, aiding them with all tax and insurance related challenges.
Christien Kraaijeveld, Partner / Senior Tax Advisor | Cappon Tax Consultants
www.cappontax.com