eigenwoningforfait

Eigenwoningforfait is a Dutch tax concept in Box 1 of the income tax system. It represents the imputed or notional annual rent of the taxpayer’s primary residence and is therefore part of the taxation on income from home ownership. The notional rent is calculated by applying a percentage to the WOZ-waarde (the official municipal value) of the home. The percentage used depends on the year and the property value bands; in general, higher-valued homes incur a larger imputed rent. The eigenwoningforfait is added to the taxpayer’s taxable income, which can increase the tax bill.

In practice, homeowners may also benefit from the mortgage interest deduction (hypotheekrenteaftrek). The deduction reduces the same Box 1 income on which the eigenwoningforfait is based, mitigating part of the effect of the imputed rent. The net effect on tax depends on the combination of the eigenwoningforfait and the mortgage interest deduction, as well as the individual tax rate. The eigenwoningforfait applies to the taxpayer’s main residence and does not apply to properties that are not used as the primary home, such as second homes or rental properties.

The purpose of eigenwoningforfait is to reflect the economic benefit of owning a home by taxing the imputed rent, while the mortgage interest deduction provides a separate incentive tied to financing costs. The exact rates and thresholds are published annually by the Dutch tax authorities and can change; taxpayers should consult current tax guides or a tax advisor for precise figures.