The future of Box-3 for vacation homes

• Financial
• Tax/legal

It’s a hot topic among vacation home owners. How much tax do I pay on my property? In recent years there has been much commotion surrounding Box-3, the tax on assets such as savings, investments and real estate. A new system has been years in the making, creating uncertainty. Outgoing State Secretary of Finance Marnix van Rij steps into the arena of investors during the Second Home Fair in MECC Maastricht. On Sunday, January 21, at noon, Van Rij will explain the new Box-3 system and the effect for owners of vacation homes.

Box-3 is a hotly debated issue among existing and prospective vacation home owners. Some buy a vacation home purely for their own use, others as an investment to make a return or a combination of these. The taxation of ownership in the Netherlands, inside or outside the European Union combined with changing legislation and court decisions has become a complex issue for many. Moreover, since the introduction of Box-3 in 2017, substantial differences have emerged between the established return and the actual return.

Exception position for vacation homes

In September 2023, Van Rij presented the outline of the revamped Box-3. The new system works toward taxation based on actual returns. There is an exception for vacation homes. Here a difference is made between purely personal use and rental income. If the vacation home is not rented out, the own use is taxed with a fixed return. If the vacation home is fully rented out, capital gains tax applies and the expenses are deductible. A long-term administration obligation is unavoidable here. The increase in value is taxed upon sale.

The presented outline of the system generated more than 1,000 responses, which is indicative of the lack of clarity. The reactions to the new plans are now being processed. The new system is expected to be debated by the House of Representatives this summer. The new Box-3 will take effect on Jan. 1, 2027.