Better well informed upfront to avoid surprises income tax

“Think a few steps ahead”. A phrase in our AAmezing office entrance on a picture of a chess game. It made me thinking. What is the similarity between a game of chess and income tax?

In the Dutch income tax return you are confronted with the facts afterwards. Wages, value of bank balances, primary residence. These data are facts which you need to take into account when processing the income tax return of the past year. You cannot change these facts afterwards. Sometimes it result in unpleasant surprises that you were not aware of beforehand.

Tax consequences

When playing a game of chess, you are dependent on the facts. The position of the pieces, the moves of your opponent and your own movement of pieces. However, by thinking a few steps ahead you can influence the rest of the game.
It is quite the same with income tax. For example, if you are considering buying a house, it is advisable to be well informed upfront about the tax consequences. Due to the current situation on the housing market potential buyers are forced to make quick decisions and arrange a mortgage application. But do not underestimate the consequences.

Rent out primary residence

Not everyone is aware that you should not only take into account the housing costs, but also the income tax consequences for the future. Can I deduct all mortgage interest ? How long? And what if the situation changes due to divorce or renting out the property?
A client was temporarily assigned to the United Kingdom. He decided to rent out his Dutch primary residence without consulting a tax advisor upfront. Afterwards he was confronted with the fact that he was no longer entitled to the mortgage interest deduction.

For our client an unpleasant surprise, but probably not too late for you.

What would you do? Will you be checkmate? Or do you think a few steps ahead and move the right chess piece?
If you would like to know more about the income tax consequences, please contact our advisors at tax[at]aame[d0t]nl or + 31 (0)15 215 88 15.
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