Real estate has long been considered a safe investment. With bricks as collateral and relatively low risk, there are excellent opportunities for investors to achieve attractive yields with relatively little effort. But times are changing. Do you want to be successful in real estate investment? Make sure you stay well informed. Our real estate experts know the ropes and would be happy to keep you up to date.
Investing means looking ahead
When you invest, you expect to achieve good yields. This requires quite a few estimations and calculations before you start, even when investing in real estate. It is common knowledge that there is a certain amount of market risk. Make sure you are aware of developments so you can factor this risk into your considerations. Investing means looking ahead.
Changes in the market and regulations mean that, as a real estate investor, you need to be increasingly aware of your (tax) position and the tax treatment of your portfolio. This requires an advisor who knows the market, is aware of all the rules, and knows which questions are relevant to you. A real estate expert who also has all the knowledge to advise you, whether you invest privately or through a business. At Baker Tilly, you’re in the right place.
Using a BV or investing privately: considerations change
Investing through a BV (Box 2 of the Dutch Personal Income Tax Act) or privately (Box 3): both options always had advantages and disadvantages. In the case of privately held real estate, for example, only a flat-rate yield was taxed, often even using a value markdown (vacant value ratio). The actual income (including for example capital gains) remained untaxed. On the other hand, expenses and losses were not deductible in the case of privately held real estate.
When investing through a BV, although the actual income is taxed, expenses, depreciation and interest reduce the taxable result. The reinvestment reserve (HIR) and various sustainability schemes also make investing through a BV attractive. That is why investing through a BV is often chosen for long-term investments and large portfolios.
The rules in the real estate sector are evolving rapidly. For example, Box 3 is undergoing major changes, moving away from the ‘old’ flat-rate system. The vacant value ratio has been virtually abolished. The question is whether investing privately is still the best option for you.
The rules on profit determination in a BV are also changing. Examples are the tightening of earnings-stripping measures and adjustments to certain VAT and real estate transfer tax exemptions.
With all this, there are continuous points of attention for both private investment and investment through a BV, which may make it desirable to reassess the investment form.
Anticipating, responding, optimising
Purchase, development, maintenance, sales: every phase of your investment’s lifecycle has unique challenges. And the rules can change during the game, so you need to stay sharp at every phase. How do you stay informed of the factors that matter to you? How do you make sure you not only have your administrative and tax obligations in order, but can look a step further?
With all the recent changes, and those expected in the coming years, it is increasingly important to reassess your position regularly. Old wisdoms and mathematical models have little value these days, while a proactive advisor has become indispensable.
Baker Tilly’s real estate expertise
Baker Tilly’s real estate practice is characterised by short lines of communication and a multidisciplinary approach. Our experts offer guidance at every phase of your investment. We provide expert advice at the moments that matter. Whether you rent out single properties privately or invest in extensive real estate projects commercially, you can rely on the practical and strategic knowledge of our specialised accountants and advisors.
Our real estate experts you are here to help you. To discuss the important choices. To run the numbers on changing legislation, new circumstances, and alternative options. And help you focus on the future.
Questions?
Would you like to meet our real estate experts, or do you have questions about our services? Please feel free to contact us! We would be happy to discuss how we can be of service.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
