Prince Bernhard, a son of Princess Margriet and Pieter van Vollenhoven, regularly makes the news with his companies. He is co-owner of the Zandvoort race track and the Mediapark.
But also of a fair amount of homes in Amsterdam. With his considerable real estate portfolio, he has become the face of landlords. It earned him the title of ‘pawn prince’.
Lodewijk Asscher’s party has certainly caused commotion, but what will pawnbrokers actually notice from such a tax? The prince is not the only one who would have to pay it.
Renting out: lucrative business
Before you can start renting out houses, you need a good deal of money to invest in real estate, but once that has been arranged, letting is an attractive business. The rental income is in many cases untaxed. That means you don’t have to pay tax on the money your tenants transfer to you every month.
The PvdA wants to change that. In its election program, the party proposes that landlords with five rental properties or more should always pay tax on their rental income. This has considerable financial consequences for landlords for whom this is not yet the case.
They now only pay tax on the assumed return of your rental properties. The tax authorities consider such a rental home as an investment, not as income. The exact amount you have to pay depends on the WOZ value of your assets, minus any debts such as the outstanding mortgage. You pay maximum about 1.6 percent of your taxable capital.
Suppose you are a pawnbroker with 24 rental properties in Amsterdam. The average WOZ value in the capital is 418.000 euro. 50 percent of the mortgage is still outstanding on each property.
Now: capital gains tax in box-3
This means that your taxable capital is 5,016,000 euros. The capital yield tax in this case amounts to 1.58 percent of that amount: 79,252.80 euros.
Each landlord transfers you 1,200 euros a month. That amounts to EUR 14,400 per year, per property. Every year you spend 1 percent of the home value on maintenance, which amounts to 4,180 euros. This means that you are left with 10 220 euros per home. With 24 properties, that amounts to 245,280 euros.
After deduction of tax, you will be left with approximately 166,000 euros.
Now that amount of money is in many cases untaxed, but if it is up to the Labor Party, that will change. Every landlord with more than five properties is seen as an entrepreneur and must pay income tax on the profit of his or her business.
Soon? Income tax in box-1
We have a progressive disc system, where you pay more and more tax the more you earn. In this calculation example, you would owe more than a ton of tax on EUR 245,280: EUR 106,943.64.
After deduction of tax, you will be left with approximately 138,000 euros.
That is still almost four times the average annual salary, but considerably less than under the current tax regime.
Landlord association Vastgoed Belang is not happy with the PvdA plan. The interest club for landlords points to the great shortage of homes in the free rental sector. It is the larger landlords who can ensure that more homes are added in the free segment.
Measures that make it less attractive to rent out multiple homes are counterproductive, says director Laurens van de Noort of Vastgoed Belang to RTL Z. “The picture that the PvdA paints turns a very large group of neat landlords away as grabbers. This seems to me mainly. an election stunt. ”
More difficult instead of easier
Politicians could look more closely at how landlords can more easily invest in new housing for rent. Over the next ten years, one million additional homes will have to be built, says Van de Noort. Private home investors can also help with this. “They really have investment capacity, but politics makes it more difficult instead of easier for them.”
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Landlords are in the bloody corner
Landlords suffer in the plans of many political parties. On Budget Day, for example, the cabinet already announced an increase in the transfer tax for landlords.
At the moment, it is still 2 percent of the purchase price for everyone, but young home buyers will no longer pay transfer tax from next year. Investors are going to pay 8 percent. That should deter them from the housing market. In this way, there must be more space for people looking for a house to live in themselves.
The parties also want to make it possible for municipalities to ban investors from certain neighborhoods, for example with a self-occupancy obligation or a purchase ban.