Tax consequences in the Netherlands of renting out your own house to your children.

Question for: #Hilda, I (divorced man) have been living in Dubai for years. I have kept my home in the Netherlands because I like that I can still return to the Netherlands in case of an emergency, and then when I am in the Netherlands I do not always have to stay in my parents’ home for the elderly.
My children live in the Netherlands, they study there, and I allow them to live in my house. They are also registered in the GBA at this address.
It is always better for a house when it is inhabited, my children ensure that my mail reaches me and they maintain the house and the garden tidy.
I have indicated my house in box 1 as an owner-occupied home.
My children pay me € 500 a month for the rent because I don’t think it’s okay that they think they can get anything as a gift from dad.
But I’d like to know if I’m doing this correctly. I don’t want to mess with the tax authorities.

Answer: if you live abroad and do not rent out your house in the Netherlands, it can be advantageous to make use of the temporary employment scheme. You may then place your home in box 1.
The temporary employment scheme may also apply if your children live in your home.
For the secondment scheme, the house may not be made available to “third parties” during the entire period of the deployment (abroad), not even partially.
It is therefore not the intention that your children rent one of the rooms to a fellow student because it is up.
There is no exception for room rental as referred to in Article 3.114 of the Income Tax Act 2001. The temporary employment arrangement, therefore, does not apply to third parties without compensation or for a fee that is lower than the maximum amount for the room rental exemption.

The State Secretary has declared the hardship clause applicable to children and a partner who remains in the home.
Then the following conditions apply:

  1. • From the moment of the posting, only the children of the taxpayer or his partner live in the house.
  2. (You are allowed to be in your house during the holidays).
  3. • The children are younger than 27 years old. If a child turns 27, the approval will expire from that moment.
  4. • Immediately prior to the deployment, the children belonged to the taxpayer’s household.
  5. (If your child first moved to Dubai, and moved into the home a few years later, this arrangement does not apply).
  6. • The children continue to live in the house for free. So no rent is paid.

In your case, it is, therefore, more sensible to let the children pay for the use of the utilities (internet, gas, water, and light, etc.) instead of for the rent.
I am assuming that as they are still studying they are under 27 and have not lived with you in Dubai. Hope this helps.