The increase in the value of the second home may be accounted for when determining the return achieved in Box 3, the Supreme Court has ruled.
The Supreme Court ruled on a number of cases on Friday and has always ruled that the higher (second) home value matters. This is a different view from the view previously used by the judge and the Court of Appeal: they assumed that increases in value should not be viewed as actual returns achieved and should therefore remain outside the boundaries of Box 3.
Judge and Court: Direct and realized proceeds only
One case concerns a man who declared in Box 3 assets worth more than €1.1 million in 2017, of which €121,000 was Dutch real estate and €800,000 was French real estate. The tax authorities impose a tax of €4,304 in box 3, including a reduction to prevent double taxation of French real estate. The man objects, but this is rejected. It goes to court, with objections to the fixed return, among other things, and on appeal, the court rules, among other things, that the actual return includes only interest actually received, dividends, rent, royalties and other possible forms of direct, realized capital gains. . The court decides that the rental income from the Dutch property is part of the actual return, but the French house is for personal use and is therefore not included. An increase in the WOZ value of €16,000 for the rental home is not included, as this is not an “actual return generated”.
In court, the man ends up with a lower valuation of about 800 euros, but the deduction to prevent double taxation is not a problem: after all, the return on the French house is zero, according to the court's reading.
The change in value is also a real return
However, in the Supreme Court, the tax authorities are still right to argue that the increase in property value should also be taken into account. The Supreme Court points to one of the rulings surrounding the June 6 Box 3 discussion. It states: “The effective return includes not only the benefits derived from the assets in Box 3, such as interest, dividends and rent, but also positive and negative changes in the value of these assets. These changes in value are also part of the effective return if the taxpayer has not yet realized them.” .
To determine the tax to be paid, the tax authorities may assume an increase in value of €16,380 in 2017 for the rented house, representing a return of more than €28,000, including rental income. The return on the French house remains zero.
See, among others, this judgment of 14 June 2024
