Box 3 investment property

BOX 3

The box 3 income in your provisional assessment 2023 has been calculated by the Tax Office according to the new legislation. In doing so, the Tax Office assumes the actual distribution of your assets. In the calculation, they use fictitious rates of return that are close to the actual rates of return.

A notional rate of return is held on the value of the savings and investment base. Three rates of return apply for 2023. On the calculated notional return, you will pay 32% income tax in 2023.

The old calculation method for box 3 until 2022 is no longer applicable. The Tax Office will only calculate your box 3 income from 2023 using the new method.

Budget Day 2023

The tax rate in box 3 will be adjusted. The cabinet proposed on Budget Day 2023 to increase the rate in 2024 by two percentage points to 34%. In 2025, the rate in box 3 will then remain unchanged. In addition, the Cabinet proposes not to index the tax-free allowance in box 3 as of January 1, 2024, which means that a tax-free allowance of €57,000 per person (€114,000 for tax partners) will also apply in 2024. The introduction of a new box 3 system - where actual returns are taxed - will be postponed to 2027.

Box 3 or box 1

Real estate investments are only included in "box 3 investments" for tax purposes if the income obtained from real estate is not classified as profit from a business and/or income from other activities. This occurs when an investor makes efforts that are qualified by the tax authorities as 'more than active asset management'. In that case, income from property is taxed in Box 1 at a progressive tax rate of (at most) 49.5%, with the actual return being taxed.

Avoid taxation in box 1

Are you pursuing (pro)active asset management when managing your real estate to maximize return on investment? Then you would be wise to outsource property management to a good property manager, such as the professionals at Amstelius. This is a clear and transparent solution, with which unpleasant surprises, such as taxation in box 1, can easily be avoided.

As experts in property management, we are happy to serve you. Your financial advisor or accountant can also explain to you the need for an outside property manager.