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Supreme Court provides clarity on the term ‘home’ in relation to transfer tax

Supreme Court provides clarity on the term ‘home’ in relation to transfer tax

The transfer of a home is taxed at a reduced transfer tax rate. The purchaser must pay 2% transfer tax on the value of the home whilst for other property this is in principle 6%. In practice, this has led to substantial discussions between a purchaser and the tax inspector as the law does not describe what the term ‘home’ exactly means. In particular in relation to office villas and transformation premises, there are some different views. On February 24, the Supreme Court has given four judgements providing clarity on this issue.

According to the Supreme Court, a property is a home if it was originally designed and built for occupancy. Whether by its nature and structure, the property is also suitable to serve as a home, is not decisive here. Even if, after a possible refurbishment with a view to a different use other than living, a property can be fairly easily made suitable for occupancy again, it will fall under the definition of a ‘home’. The fact that an acquisition may not contribute to the movement in the housing market does not detract from this.

If despite this definition of the Supreme Court, the parties are unable to come to a conclusion, significance can also be attached to requirements or limitations that arise from public law regulations.

By Daan Bastiaans

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