More often we experience the mortgage advisor giving tax advice. It goes without saying that giving advice outside your expertise does not equal something positive.
Mortgage advisor giving tax advice
In recent weeks we are confronted with statements made by mortgage advisors without taking into account tax rules and regulations. The mortgage advisor is for the Dutch tax payer a trusted person, maybe an anchor in the wild road to the house purchase. A lot of trust is put in the mortgage advisor, and we see that this trust is abused. Maybe not deliberately, well-meant advice that can bankrupt an individual.
Here are two examples.
Working abroad – mortgage is in Box 3 – no interest deduction
A couple is about to purchase a home in the Netherlands, but the German wife continues to work in Germany. Where a person works, does not influence the place of tax residence in this matter. The tax residence is based on article 4 of any tax treaty. That is the central point of life. Her husband, the house and all that comes with it, is her central point of life. She is a Dutch tax resident.
The mortgage advisor has a different opinion. Based on the work done in Germany he states she is not a resident Dutch tax payer. Consequently her part of the house moves to Box 3, no mortgage deduction and 10,4% transfer tax for her part of the house is to be paid.
Needless to say, the chance that this couple continues the house hunt, is slim. All caused by ill tax advice provided by an uneducated tax person.
Moving abroad – keeping the house and mortgage – do not tell the mortgage company
Another person contacted us. This person is going to work in the United Arab Emirates and is keen to deregister from the Netherlands. By deregistering he stops being a Dutch tax resident and with substantial tax free income from the Emirates, that is what you would like to do.
The property being his home in the Netherlands is a good investment and he actually wants to keep it. The mortgage company provided a loan under the condition he would be having his main residence in the house. As that is to change, he needs to inform the mortgage company. That would imply he needs to change his mortgage and do a repayment.
That was the moment the mortgage advisor was quick to state that there is no need to inform the mortgage company. Simply say nothing. The worse thing that can happen is that they sell your property. That were the exact words. It is a pity to learn that this so called mortgage expert not even knows his own profession well enough. Yes, the mortgage company will eventually sell the property, but on auction. That auction is only accessible for person who can pay cash. It is a given that not the full mortgage can be repaid by this sale, hence this client of the mortgage expert has a huge debt due to this good advice.
How should the mortgage advisor act in our opinion?
That is very simple. The moment I would explain you about how to engage a mortgage, that is the moment any mortgage advisor would say. He Arnold, should you not stick to what you are good at. And exactly that is how we look at the mortgage advisor. The moment the mortgage adviser provides tax advice that exceeds the interest deduction, that is the moment the mortgage advisor should send you to the tax advisor.
Tax is exciting
We think tax is exciting. Besides tax being exciting, it can also have a serious impact on your daily spending when you are seriously misinformed. The purchase of a house and the loan connected to that is a serious investment. Do not have this moment spoiled by ill tax advice.
