The municipality is the executor of the WOZ law. WOZ stands for “Waardering Onroerende Zaken” and it is best translated as “Valuation of Property”. In January or February of each year home -owners receive a new assessment of the WOZ value in their letterbox. The purpose of the WOZ law is that it forms the basis for the calculation of different municipal taxes, such as property tax, income tax and water charges. Since 2007 a WOZ value has a validity of one year. Unless, of course, you object to your evaluation.
On a national scale, the WOZ-values have dropped on average 2,3% in relation to the previous year. The actual increase or decrease of the value of a home can differ regionally. In case you are in doubt about the WOZ value of your home you may want to consider filing an objection to the new value. Obviously this only makes sense if you believe that the WOZ of your home is too high. The credit crunch started out in August 2008 with the general expectation that one should now start to see the results of the crisis in the newly adjusted WOZ values. Please remember that an objection has to be sent to your municipality within six weeks after receiving the new notification. Should the WOZ assessment be way too low, the municipality reserves the right to adjust the value.
The different taxes that are related to the WOZ value are: Property Tax (Onroerendezaakbelasting)
This amount depends on a certain percentage of the WOZ. This percentage is determined by the municipality (and therefore differs from city to city).
Income Tax (eigenwoningforfait)
As far as the Tax authorities are concerned, a home-owner enjoys a fictitious income in box I. In other words, a percentage of the WOZ value (for most homes this is 0,55%) is added to your taxable income. So ,for example, if the value of your home is € 300.000, the fictitious income is 300.000 x 0,55% – € 1.650. The effect of this is that this part of your annual interest payment is not tax deductible. So if we continue with the same example, the numbers might look like this: Mortgage say € 300.000. Interest rate 5%. € 300.000 x 5% = € 15.000 – € 1.650 = € 13.350. So only € 13.350 is tax deductible instead of € 15.000. So if the WOZ value is too high in relation to the market value, it could be to your advantage to contest the value.
Water and sewer charges
These charges are in the hands of the water and sewer authorities (Waterschap). The rate is dependent on the region in which you live, and the different tasks that this local authority has to fulfill.
Inheritance tax
For death duty purposes, the WOZ value is also relevant. However, death duty is a complex subject which will not be discussed in this article.
You have now read how the WOZ value of your property affects different taxes. If you have received the new assessment, check if this is in accordance with your own view of the value of your property. Should you feel the WOZ value is not correct, you should object within six weeks. Feel free to contact us if you would like to receive an example of a letter, which you could send to your municipality.