What is the best time to pass on a property?
The end of the year is approaching, and for many home buyers the question arises whether it is better to pass this year, or wait until the new year. Passing a property, or the official transfer of ownership at the notary, can have a big impact from a tax point of view. What are the pros and cons of passing at the end of the year versus in the new year?
Why pass this year?
- Mortgage interest deduction: If the house is passed this year, the mortgage interest paid this year can be included in the 2024 tax return. This can result in a tax advantage, especially if mortgage interest forms a large part of the monthly expenses.
- WOZ Value: The WOZ value of a property is determined on 1 January of the year. This means that the 2025 WOZ value will be based on the value on 1 January 2024. If the property is passed this year, this may affect the amount of municipal taxes and any levies in the following year.
- Overdrachtsbelasting: De overdrachtsbelastingtarieven kunnen jaarlijks wijzigen. Als er plannen zijn om de tarieven te verhogen in het nieuwe jaar, kan het financieel voordeliger zijn om dit jaar nog te passeren. Dit geldt vooral voor huizenkopers die een woning kopen die niet als hoofdverblijf dient (zoals een tweede woning of beleggingspand), omdat deze belasting dan hoger kan uitvallen.
Benefits of waiting until the new year
1. End-of-year rush at Notaries: The last few months of the year are often busy for notaries. This can lead to longer waiting times and higher costs due to increased demand. By pushing the transfer to the new year, there can be more time to go through things thoroughly.2. Financial Stability: By waiting until the new year, one can start with a ‘clean’ financial year. All costs and benefits of the new home will then fall within one tax year, which can make administration more manageable.
3. Savings on Owner-Occupied Housing Allowance: Those who do not pass until January do not pay any owner-occupied housing allowance for the current year. This saves a percentage of the property's WOZ value in income tax, which can be especially beneficial with a relatively high property value.
What is the best time for you?
The optimal time to pass depends very much on your personal situation. Consider your financial situation, the amount of the mortgage, and any plans to remodel or rent the property.
Tips for making a choice:
- Consult with a Financial Advisor: A financial advisor or tax advisor can help identify the specific benefits for your situation.
- Check the Transfer Tax: Take into account any changes in transfer tax in the new year.
- Do the benefits of mortgage interest deduction outweigh the potential savings from the owner-occupied home tax credit?
Passing a home is an important financial step. By looking carefully at the tax benefits and your own situation, you can decide which moment is most beneficial for you.
Passing a property is an important financial step. By looking carefully at the tax advantages and your own situation, you can determine the most favourable moment for you.
