2021 is a year in which a few things will change in the field of legislation and regulations. This is also the case with regard to transfer tax. On November 12, 2020, the House of Representatives approved a bill for the adjustment of the transfer tax. The aim of this bill is to improve the position of starters in the housing market in relation to investors, because investors are often too quick with buying a house, especially in (larger) cities. This makes it increasingly difficult for starters to buy a home. You can read in this blog which changes will apply to both categories from 1 January 2021 and what you should pay attention to as a result.
The two measures
In order to realize the above-described objective of the bill, two changes, or at least measures, will be introduced in the field of transfer tax from 2021. It is expected that this will increase the number of housing transactions by the starter buyers and decrease housing transactions by investors.
The first measure in this context applies to starters and, in short, entails an exemption from the transfer tax. In other words, starters no longer have to pay transfer tax from 1 January 2021, so that the purchase of a home becomes a lot cheaper for them. As a result of the exemption, the total costs related to the purchase of the home, depending on the increase in value of the homes, will indeed decrease. Please note: the exemption is one-off and the price of the home may not exceed € 400,000 from 1 April 2021. In addition, the exemption only applies when the transfer of the property takes place at the civil-law notary on or after 1 January 2021 and the moment of signing the purchase agreement is not decisive.
The other measure pertains to investors and means that their acquisitions will be taxed at the higher general rate from 1 January 2021. This rate will be increased from 6% to 8% on the date mentioned. Unlike starters, it thus becomes more expensive for investors to purchase a home. For them, the total costs associated with the purchase of the home will increase as a result of the increase in the sales tax rate. Incidentally, this rate does not only tax the acquisitions of non-dwellings, including business premises, but also the acquisitions of dwellings that will not be used or only temporarily used as main residence. In this context, according to the explanatory memorandum to the bill for the adjustment of the transfer tax, consider, for example, a holiday home, a house that parents buy for their child and houses that are not bought by natural persons, but by legal persons such as housing corporations.
Starter or investor?
But what measure should you keep in mind? In other words, are you a starter or an investor? Whether someone is actually entering the owner-occupied housing market for the first time and has never acquired a home before, could be taken as the starting point for answering this question. However, who qualifies for the starter exemption and to whom the increase in the turnover tax rate applies, is not determined on the basis of this criterion. It does not matter for the exemption whether you as a buyer have already owned a home before. In other words, the house does not have to be your first owner-occupied home to be eligible for the exemption.
The bill for the adjustment of the transfer tax uses a completely different starting point. Whether you can be classified as a starter and therefore stand a chance of the starter exemption depends on three cumulative criteria. The criteria are as follows:
- The age of the acquirer. To be considered a starter, you must be between 18 and 35 years old. The upper limit of 35 is used in the bill because the AFM’s investigation has shown that it is on average more difficult to bear the costs for the buyer at a lower age than 35 years. In addition, for the application of the exemption with the lower limit of 18 years, the requirement that you are of age applies. The purpose of this lower limit is to prevent improper use of the starters’ exemption: it is not possible for the legal representatives to use the exemption when purchasing a house in the name of a minor child. Furthermore, the age limits must be applied per acquirer, even in the event that one home is acquired by several acquirers jointly. If one of the acquirers is older than 15 years, the following applies to this purchaser: no exemption on his own part.
- The acquirer has not previously applied this exemption. As mentioned, the starters’ exemption may only be used once. To ensure that this rule is not violated, you must declare clearly, firmly and without reservation in writing that you have not previously applied the start-up exemption. This written statement must then be submitted to the civil-law notary in order to make use of the exemption from the transfer tax. In principle, the civil-law notary can rely on this written statement, unless he knew that this statement had been issued incorrectly. If it appears afterwards that you as the acquirer have applied the exemption earlier despite the statement issued, an additional assessment will still be made.
- The use of the house other than temporarily as the principal residence by the acquirer. In other words, the scope of the starters’ exemption is limited to acquirers who will actually live in the home. With regard to this condition, it is also necessary for you as an acquirer to declare in writing clearly, firmly and without reservation that the house will be used other than temporarily and as a principal residence, as well as to submit this written statement to the civil-law notary prior to the acquisition if the acquisition goes through him. Temporary use means, for example, the rental of the house or its use as a holiday home. While main residence includes registration with the congregation and building a life there (including sports activities, school, place of worship, childcare, friends, family). If, as an acquirer, you are not going to use the new home as your main residence or only temporarily from 1 January 2021, you will still be taxed at the general rate of 8%.
The assessment of these criteria, and thus the answer to the question of whether you qualify for the application of the exemption, takes place when the house is acquired. More specifically, this is the moment when the deed of sale is drawn up at the notary. Immediately prior to the execution of the notarial deed, the written statement regarding the second and third conditions must also be submitted to the notary. The moment at which the purchase agreement is signed is not relevant for the issue of the written statement, just as it is for the acquisition of the starters’ exemption.
The purchase of a home is an important step for both the starter and the investor. Do you want to know to which category you belong and which measures you must take into account from 2021 on? Or do you need help with making the statement required for the exemption? Then contact Law & More. Our lawyers are experts in real estate and contract law and are happy to provide you with help and advice. Our lawyers will also be happy to assist you in the follow-up process, for example when it comes to drawing up or checking the purchase contract.