From inherited property to home

When Jacob received a phone call from a notary on a Monday morning, he could never have imagined that within a few weeks he would become the owner of his aunt’s home. It was no surprise that his aunt had left him something in her will; they had always shared a special bond. But this was beyond anything he had dared to hope for.

Jacob faced a dilemma. Leaving the property vacant was not an option, as the costs would continue to accumulate. Selling the home felt far too final, especially since he secretly liked the idea of moving into it himself one day. There was just one complication: he was living abroad.

Professional advice

After an in depth conversation with Jacob, we were able to offer a practical middle ground: temporary letting. This ensured that the costs of the property were covered, the home remained occupied and well maintained, and Jacob had the time and peace of mind to organise his affairs and prepare for a future move back to the Netherlands.

The practical side

We guided Jacob through the world of temporary letting. These are some of the key points every current or future landlord should know:

• Temporary letting with a diplomatic clause

With this form of temporary letting, a tenancy agreement is concluded with a predetermined end date because the landlord intends to need the property again in the future, for example for personal occupation.

• Insurance and mortgage

Not every mortgage lender permits temporary letting. Jacob had to consult with his bank and adjust his insurance policies accordingly. The property still had a small outstanding mortgage. As a result, Jacob was not entitled to mortgage interest relief, as this tax benefit only applies to a primary residence.

• Property management

Because Jacob lived so far away, he decided, based on our advice, to entrust the property management to us as well. This also offered potential tax advantages. When a landlord actively manages the letting process themselves, the Dutch tax authorities may, under certain circumstances, classify the activities as income from other work (Box 1), which could result in taxation of the rental income. By outsourcing both the letting and the management, the landlord’s role remains more passive, which can be fiscally advantageous.

• Tax considerations

A property falls within Box 1 when it serves as your primary residence. Once the property is let, this is no longer the case, and it generally moves to Box 3. This means that the property’s WOZ value, minus any outstanding mortgage debt, is included as part of your assets for wealth tax purposes. The rental income itself is not taxed.

Time and flexibility

Before long, we found Daan, who, together with his wife and two children, was looking for temporary accommodation while searching for a permanent home to purchase. They had been living elsewhere in the Netherlands for many years and were relocating to this region because of Daan’s new job. The property was a perfect fit for them, and they quickly grew fond of the peaceful neighborhood.

Meanwhile, Jacob had the time and flexibility he needed to put his affairs in order abroad and prepare for a future move to the Netherlands and eventually into the home.

Do you, like Jacob, need time to decide what to do with an inherited property? Temporary letting with a diplomatic clause could be the ideal intermediate solution. We would be happy to discuss the possibilities, the conditions, and the practical implementation with you.

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