From 1 January 2023, the cabinet will reduce the tax-free donation for the purchase of a home from 106,671 euros to 27,231 euros. This means that the greatest effect of the ‘jubelton’ has disappeared. It will be abolished completely from 2024.
The move announced by the cabinet is part of the coalition agreement. Initially, the Tax and Customs Administration announced that it would not be able to implement the change until 2024, to the dissatisfaction of some political parties. The jubelton increases the inequality between first-time buyers with wealthy parents (generally homeowners) and those without wealthy parents. This is how having a house becomes ‘hereditary’. It would also drive up house prices because more money flows into the housing market.
In addition to the tax exemption for the purchase of a home, parents have the option of giving their child a one-off amount of EUR 27,231 tax-free, which the child can spend freely. In 2023, the owner-occupied home exemption will be reduced to the same amount. Parents can donate the amount for a home or for leisure. You can’t do both.
Different tax percentages
At the moment, not only parents can give tax-free. Even if someone else sponsors you as a starter (up to 40 years old) you do not have to pay tax on the donation. Exactly how high the tax will be is determined every year. Currently, it is 10 percent for (step) children and partners up to 130,425 euros and 20 percent above that. If grandparents donate, that becomes 18 and 36 percent respectively. You pay 30 or 40 percent tax on a gift from another sugar daddy or aunt.
“This is an important step that contributes to a fairer playing field among starters and that reduces inequality,” said Hugo de Jonge, Minister of Housing and Spatial Planning. The change is expected to bring in EUR 7 million a year for the treasury.
The fact that the measure is announced almost a year in advance may cause a small shock to the housing market. “It is a well-known mechanism that home buyers will anticipate these kinds of tax changes,” says Paul de Vries, housing market expert at the Land Registry.
“Parents generally prefer their child to benefit from the money than the government. You also saw a shock effect when the transfer tax for starters was abolished. Another example was seen in the year that you could no longer get a mortgage interest deduction on interest-only mortgages. In the month before introduction, you saw a boom in interest-only mortgages. You have to imagine that everyone who is professionally involved in the housing market will point out these kinds of advantages and disadvantages, such as brokers and mortgage advisers.”
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