Are you entitled to tax-free rental in 2021, 2022 or 2023? This is possible with the room rental exemption, but how large is the room rental exemption in 2021, 2022 and 2023. Moreover, the Tax Authorities do not simply give you this tax exemption for income from renting out a room. You must meet a number of conditions. What conditions apply to the room rental exemption? Tax-free rental can earn you a few thousand euros extra. There is no housing allowance for room rental.
Renting can be done in many ways
Renting out living space can be done in many ways and under all kinds of conditions:
- You rent out an entire house;
- You rent out a room;
- You rent out living space in a house in which you also live;
- You rent out a holiday home;
- You rent out a house that is for sale;
- You rent for a certain period of time;
- You rent for an indefinite period.
And so I can go on and on. In addition, we have extensive legislation and regulations in our country regarding rent, rental and rental protection. But what about fiscal matters, how does the Tax Authorities view this? Is tax-free rental also possible?
Conditions for room rental exemption
Yes, you can rent out a room tax-free. If you rent out a room in your own home and the gross rental income is lower than the exemption, it is one hundred percent tax-free. These amounts include compensation for the use of furniture and energy. The conditions for this exemption are as follows:
- A gross rental income that is lower than the exemption;
- You rent out one or more rooms, but not an independent living space with its own front door or kitchen;
- The rental may not be short-term;
- Both you and the tenant are registered in the GBA at the same address;
- You rent out the living space in your own home;
- The tenant is not a company.
Tax benefit for room rental, a calculation example
If you meet the conditions of the room rental exemption, this means that you will not pay income tax on more than 5,700 euros in 2022 and 2023. Depending on the level of your income, this means a tax benefit of almost 1,900 euros to almost 3,500 euros. Another major advantage of the room rental exemption is that you retain your full mortgage interest deduction.
Room rental exemption 2021, 2022 and 2023, what are you entitled to?
The room rental exemption is higher in 2022 than in 2021. If the rent does not exceed 5,668 in 2021, you fall under the room rental exemption. The exemption amounts to:
- In 2020 5,506.
- In 2021 5,668.
- By 2022 5,711.
- By 2023 5,881
Pay tax on rental income
In other cases you do pay tax on the rental income. Either in box 1 of the income tax or in box 3 for a holiday home. If you have two houses for the time being because the sale of your old house is not going smoothly and you rent out the house completely, the mortgage interest deduction during the period of rental also expires completely. A setback that makes renting out unattractive. In that case, it is better to put your old house for sale and rent out a room.
Renting to multiple people, a boarder in the house
Please note that if you rent rooms to multiple people, the rental income can easily exceed the exemption. In that case, it may be worthwhile to include one tenant under the exemption and designate the other tenant as a boarder. For the boarder you pay tax on the rent, but after deduction of the boarding fee, for the regular tenant the proceeds are tax-free.
Conclusion: tax-free rental in 2021, 2022 or 2023
If you can make use of the room rental exemption, you will be in luck. If that is not the case, calculations must be made, because the rental can also have consequences for your mortgage interest deduction and because it can have consequences for the rental value. In that case, you look at the balance of the net rental income minus the loss of mortgage interest deduction and plus the benefit of the lower rental value. Anyone who rents out a second home, such as a holiday home, also does so tax-free in terms of rent, but is subject to capital gains tax on the value of their home.
- Earn tax-free in 2019, 2020 and 2021
- Holiday rental or bed & breakfast in your home: Amsterdam