The extra-high exemption on gift tax for an owner-occupied home, also known as the “jubilee bonus”, will be abolished completely in the Netherlands as from 1 January 2024. As from 1 January 2023, the jubilee bonus is already being significantly reduced to €27,231. So, if you still want to make use of it, you need to be quick!
In the Netherlands, gift tax is levied on everything that is acquired from someone who lived in the Netherlands at the time of the gift. Gift tax is also levied if a person lived in the Netherlands and made a gift within a year of leaving the Netherlands. That applies even if the person in question does not have Dutch nationality.
If you are between the ages of 18 and 40, you can receive a tax-free gift for your own home of up to €106,671 this year. The abolition of the jubilee bonus that has been announced is part of the coalition agreement. It seems that the change could not be introduced until 2024. Although it will not be completely abolished until 1 January 2024, the jubilee bonus will already be significantly reduced as of 2023.
This ensures that the additional increase in gift tax exemption for owner-occupied homes will practically disappear as from 1 January 2023.
In fact, parents have the option to give their child a one-time tax-free gift of €27,231, which the child is to spend freely. This option will not be affected and will remain in place. In 2023, the exemption for own homes will be reduced to the same amount. Parents can therefore gift the amount next year for a house or for free spending but not for both.
The jubilee bonus will be phased out as soon as possible because research has shown that it increases inequality between house hunters with rich parents and those without. Additionally, it would only further increase house prices because more money goes into the housing market this way.
“This is an important step that helps to level the playing field between first-time buyers and reduces inequality,” said Hugo de Jonge, Minister of Housing and Spatial Planning, speaking about the abolition of the jubilee bonus.
The fact that the measure is being announced almost a year in advance may mean that this year’s housing market will still be very “disrupted” by the jubilee bonus. Parents generally prefer their child to benefit from the money, rather than the government. It is therefore expected that the jubilee bonus will continue to be used frequently this year.
Of course, it is important that all jubilee bonus requirements are met. The amount gifted must be spent on the purchase of an owner-occupied home. In addition, renovations, improvements or additional mortgage payments on an owner-occupied home may be made with the jubilee bonus. It must always relate to the owner-occupied home of the person receiving the gift.
The jubilee fund can be gifted in one go or spread over a maximum of 3 consecutive calendar years.
So, for example, €30,000 in 2022, 2023 and in 2024 if you receive the gift for the first time in 2022.
By spreading the gifts, you can therefore ensure that a larger amount can still be gifted tax-free in 2024. For the time being, staggered gifts from 2024 no longer seem possible but the exact rules for the exemption have not yet been established.
Incidentally, it is not only parents who can donate tax-free a higher amount than the normal gift exemption (€5,677 for children and €2,274 for others). Even if someone else sponsors you, provided that you are between 18 and 40 years old, you do not have to pay tax on the gift. Exactly how high the tax will be is determined each year.
At present, it is 10% for (step)children and partners up to the first €130,425 above the exemption and 20% tax above. If grandpa or grandma donates, it will be 18% and 36% respectively. If you receive a gift from another person such as an uncle or friend, you will pay 30 to 40% tax if you exceed the exemption.
You pay the least tax if maximum use is made of the exemptions. For large sums, it is sometimes better to spread a gift over a number of years. This prevents a gift from falling into the second and higher tax brackets. If at all possible, you would of course like to gift completely tax-free.
If you still want to make a gift of up to €106,671, it is imperative that you do so in a timely manner.
Author: Romee (R.F.M.) van der Rest, Huijbregts Notarissen, ‘s Hertogenbosh