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06 December 2019 / article

2% real estate transfer tax applies for a building without doors, windows or roof

According to the Zeeland-West-Brabant District Court, an immovable property continues to qualify as a dwelling for real estate transfer tax at the time when damage and dereliction have occurred.

Financial Paperwork

A buyer acquired an immovable property, of which the floors, window frames, windows, doors, roof covering and pipes were missing at the time of delivery. With regard to this acquisition, the buyer paid 2% real estate transfer tax. According to the tax inspector, however, this does not constitute a building and therefore is not a dwelling, because it is not a covered and/or enclosed space.

Question of law

The dispute is whether the 2% rate for dwellings was applicable or not.

Assessment by the District Court

According to the Zeeland-West-Brabant District Court, the tax inspector has not sufficiently demonstrated that the dereliction is such that the property no longer constitutes a building. Despite the dereliction that has occurred, the objective, structural nature (design, structure, layout) of the property still results in a residential function. The fact that the property is not suitable for habitation at the time of delivery is not relevant.

Practical implications

The reduced transfer tax rate of 2% continues to be a cause for concern. In our previous newsletter we looked at the qualification of a ballet hall 'in transformation'. The ’s-Hertogenbosch Court of Appeal ruled that the 6% rate was applicable because there were no pipes for sanitary facilities and utilities. The difference in results could be explained by the fact that the proceedings before the Court of Appeal involved a transformation project.

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