WOZ-waarde and Municipal Taxes

If you own a house or apartment, you receive a letter from your municipality at the beginning of the year with local taxes.

The amount of these taxes depends primarily on the value of your property, the so-called WOZ-waarde. The tax rates of your specific municipality also matter: some municipalities have high rates exceeding one percent of the WOZ-waarde, while others are more moderate, with rates at fractions of a percent. With the same WOZ-waarde, the tax difference between municipalities can vary by an order of magnitude.

Interestingly, you cannot influence the municipality's rate, but you can try to lower the WOZ-waarde if needed. There are even companies that specialize in filing objections with municipalities to reduce property values. Such a reduction correspondingly lowers your taxes — not only on property (onroerendezaakbelasting), but also waste tax, water tax, and ground lease (erfpacht) calculations.

On the other hand, a high WOZ-waarde can be advantageous. For instance, if you plan to sell the property soon, it is good that its market value is increasing.

There are also two useful things that not everyone may know about.

First, you may be able to extend your mortgage, and the increased WOZ-waarde proves to the bank that there is room for such an extension. For example, the house was purchased for 400,000, and its current possible market price is around 600,000, so this difference can be used to borrow additional funds through the mortgage for renovation, energy efficiency improvements, buying out leased land, and certain other cases. Importantly, spending this money on buying a car, vacations, education, or anything not related to housing is a bad idea.

Also, a high WOZ-waarde can allow you to reduce your mortgage interest rate. This works as follows: the mortgage interest rate is often tied to the ratio of the debt amount to the total value of the house. The less you owe the bank relative to the market value of the property, the less risky the loan is for the bank, and the lower interest rate it can offer. For example, you took out a mortgage of 300,000 on a house worth 400,000, meaning the loan is 75% of its value. If the value increased to 600,000, you now owe the bank 50% of the house value. Admittedly, sometimes such recalculation requires paying a penalty, but there are special circumstances here as well, and you can avoid it or even benefit despite the penalty.

So it is useful to determine your goals and plans in advance and consciously approach this issue — whether to file an objection or accept the WOZ-waarde as is and pay taxes. You can easily request to pay taxes in installments to avoid a large one-time payment.