In the emerging and ever-expanding tax maze called Box 3, there are recent and interesting developments. These may affect your own property strategy (sell/hold/buy?).
1. Current state of play of box 3 legislation
As a starting point, you are taxed on the fixed return. For the box 3 category ‘other assets’ which includes rented property, the flat/assumed return is 5.88% (2025) of the WOZ value. And in certain situations, the WOZ value minus a discount may be used for rented private property. That discount depends, among other things, on the amount of the rent. The box 3 rate of 36% is then applied to this 5.88%. Financing/debt may be deducted, but only about a quarter.
If, in the years 2023 to 2027, your actual return is lower than the flat rate, then that lower return may be assumed. You must then be able to prove this - rebuttal rule - using a form to be filled in, which will become available next summer.
2. Year 2028 and beyond
The government will soon submit a new Box 3 bill to the House of Representatives. State Secretary of Finance Tjebbe van Oostenbruggen announced this last week. The gist of this proposal is that from 2028, a capital gains tax will apply in respect of holdings of bonds, stock market shares, etc. An annual increase in value will thus be taxed directly (without the bonds/shares etc. having to be redeemed).
Only real estate and shares in start-ups will be exempt from this newly introduced tax. With regard to (leased) real estate, the tax authorities will only tax the profit at the time of sale - and assuming that it is sold at a profit. This is therefore a capital gains tax.
3. What does this mean for practice (provided the new bill is passed)?
It seems very likely that if this legislation is introduced in this way, private real estate will not be taxed at all in Box 3, as long as it is not disposed of. Only when sold at a profit, a tax assessment will follow. The consequence could well be that investors may well start moving back into private real estate en masse.
By the way, this announcement of the bill is already being criticised. One criticism is that, for example, investors in a real estate fund would have to pay annual tax on the increase in value, while investors investing directly in real estate would not.
In short, this is certainly not the last word on the matter. We will keep you informed.
