Renting out a house in 2023: The impact of box 3 on private landlords

From a political perspective, the dominating image is that of slumlords who need to be stopped. This has led to increased taxes on rental properties from 2023, especially in Box III.

The position of private landlords in the Dutch housing market is the subject of heated debate. On one hand, criticism is directed at so-called 'slumlords' who rent out large numbers of homes and push other buyers out of the market who want to buy a home for personal use. On the other hand, there are individuals who are considering renting out one or two properties as an alternative form of building up a pension.

From a political perspective, the dominating image is that of slumlords who need to be stopped. This has led to increased taxes on rental properties from 2023, especially in Box III.

Renting out a house in 2023: The impact of Box III on private landlords

There are several key factors contributing to the declining returns for private property rental at the bottom line in 2023:

Vacancy ratio: The vacancy ratio is simply the ratio of annual rental income to the property's assessed value (WOZ value). The lower this ratio, the lower the WOZ value used in the final calculation of Box III tax. This vacancy ratio has been significantly increased, resulting in a higher amount of your assets being taxed.
Fictitious return: In 2021, the tax authorities applied a fictitious return of 4.5% on rental properties; by 2023, this has been raised to 6.17%.
Tax rate: The tax rate on the fictitious return is 32% in 2023 (up from 31% in 2021) and is even being increased by 1% each year. Additionally, the calculation of the actual returns from the rental property plays a role. For illustration, let's take a property with a WOZ value of €255,000 in 2021 and assume a net operating result of €8.778 per year, consisting of assumed rental income minus expenses such as maintenance, insurance, and municipal taxes.

Based on this data, a comparison can be made of the difference in returns between a rental property in 2021 and 2023 due to the higher tax burden.

The change in the vacancy ratio means that a larger portion of the WOZ value is considered as wealth for tax purposes (95% in 2023 instead of 67%). This, together with the higher fictitious return and tax rate in 2023, results in almost €2.400 more tax at the same operating income, reducing the net return from about €6.400 to €4.000.