If your home is your main residence, it is taxed under Box 1: income from work and home. For most people, the taxable income from their home is limited to the ‘imputed rental value’ (eigenwoningforfait), a fictitious benefit calculated as a percentage of the property’s WOZ value.
"}},{"componentType":"paragraph","title":"Imputed rental value 2025","richBody":{"value":"
| WOZ-value | Imputed rental value |
|---|---|
| €75,000 - €1,330,000 | 0.35% |
| > €1,330,000 | €4,655 + 2.35% above €1,330,000 |
You can deduct certain costs from this imputed amount, such as mortgage interest, provided the mortgage meets specific tax conditions. It must be for your primary residence, and for loans taken out since 2013, there is a repayment requirement: you must repay the loan within a maximum of 30 years, using either a linear or annuity repayment structure. The maximum deduction rate for mortgage interest is 37.48% in 2025, expected to rise slightly to 37.56% in 2026.
"}},{"componentType":"sectionTitle","title":"No or low mortgage: the Hillen deduction"},{"componentType":"paragraph","richBody":{"value":"If you have no mortgage or only a small one, you may qualify for the ‘Hillen deduction’. This applies when your imputed rental value exceeds the deductible interest. The deduction equals this difference, but it has been phased out gradually since 2019. In 2025, it still covers 76.67% of the difference.
"}},{"componentType":"sectionTitle","title":"What is the villa tax?"},{"componentType":"paragraph","richBody":{"value":"The villa tax is a higher imputed rental value applied to homes with a WOZ valuation above €1,330,000. This tax has been in place since 2009 and is intended to impose a heavier burden on high-end properties. The tax rate has climbed from 0.80% at inception to 2.35% in 2025, almost tripling. Over the same period, the threshold has risen from €1,000,000 to €1,330,000.
"}},{"componentType":"paragraph","title":"Example (2025)","richBody":{"value":"Suppose your home has a WOZ value of €1.8 million and no mortgage. The imputed rental value would be €15,700. With no interest to deduct, you receive a Hillen deduction of €12,036 (76.66% of €15,700). The remaining amount, €3,664, is added to your taxable income in Box 1 and taxed at a maximum rate of 49.50% (the top rate in Box 1). This means the tax payable on your home, without a mortgage, amounts to €1,813.
"}},{"componentType":"sectionTitle","title":"Is the villa tax sustainable?"},{"componentType":"paragraph","richBody":{"value":"The imputed rental value creates a fictitious income, similar to the system in Box 3, which has faced legal scrutiny by the Dutch Supreme Court over the past years. The question is whether this fictional income aligns with the actual benefit of homeownership.
Several tax advisors believe the higher tax on expensive homes may conflict with European law, echoing the Box 3 litigation. On October 21, the Amsterdam Court of Appeal issued a ruling in a related case. The court concluded that the villa tax does not violate European property rights. For now, the measure remains in effect. At the time of writing, an appeal to the Supreme Court can still be filed, which means the outcome could change later.
"}},{"componentType":"sectionTitle","title":"What can you do?"},{"componentType":"paragraph","richBody":{"value":"The Box 3 cases showed that only taxpayers who filed timely objections were eligible for compensation. If the Supreme Court eventually rules the villa tax unlawful under European law, relief may only apply to those who objected in time. This underscores the importance of filing an objection promptly, even if the outcome is uncertain. Many tax advisers recommend submitting a precautionary objection within six weeks of receiving your assessment.
If you are affected by the villa tax, consult your tax adviser early. Together, you can assess whether an objection makes sense and determine the best approach for your situation.
"}},{"componentType":"paragraph","richBody":{"value":"Written by Stef Goossens, Tax Expertise Manager. Based on the situation as of November 11, 2025.
"}},{"componentType":"paragraph","title":"Disclaimer","richBody":{"value":"The information provided by ING in this article is not an offer, advice, or financial service and is solely intended to inform you and provide practical tips. We always recommend consulting a specialist or tax advisor regarding your financial and/or wealth planning. This article has been compiled with the utmost care. However, it may contain inaccuracies or omissions. ING is not liable for any damage (of any kind) resulting from the use of the information provided. No rights can be derived from the information. Any rates mentioned are indicative and not binding for ING. All rights and changes reserved. This is a publication of ING Bank NV, registered in Amsterdam.
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