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.
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.
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 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.