How does Box 3 apply to vacation rentals?
What about taxes?
Investing in a vacation rental is lucrative: you get to enjoy the property yourself and benefit from both rental income and a potential appreciation in value. But what about taxes?
The Tax and Customs Administration charges a so-called notional return on your assets in Box 3, which also includes vacation rentals provided you do not permanently reside there. This often raises questions: how much tax do you have to pay? What is the impact of a loan? And how does this compare to savings?
On this page, we will explain clearly how Box 3 works, what it means for your vacation rental, and why an investment often proves to be tax-efficient. With clear examples, up-to-date figures, and smart insights on reducing your tax burden.
How does Box 3 work exactly?
We explained it in 5 steps. Check them out below. ⤵︎
1. Calculating value on January 1
1. Calculating value on January 1
The value of your vacation rental (usually the WOZ value, or market value) is added to other assets such as:
- Savings
- Shares/investments
- Other real estate (such as additional homes)
From this, you subtract any debts (applying to these assets).
2. Apply exemption
2. Apply exemption
Every taxpayer will have an exemption of €57,684 in 2025. Are you a tax partner? Then you are jointly entitled to €115,368 exemption.
3. Calculate your taxable base
3. Calculate your taxable base
Your total assets in Box 3 are determined by the value of your possessions, such as your vacation rental, savings, and investments. First, deduct any deductible debts from this amount.
1. Determine your net worth:
Your total assets minus the portion of your debts above the debt threshold is your net worth. The debt threshold in 2025 is:
- €3,400 without a tax partner
- €6,800 with a tax partner
2. Apply the exemption to calculate your taxable assets:
Subtract the exemption from these net assets to determine your taxable assets. For 2025, the exemption is €57,684 per person (€115,368 with a tax partner).
For example: If you have €350,000 in assets without debts and €57,684 in exemptions, your taxable assets amount to €292,316.
Example without partner
- Total investments: €350,000
- Debt: €100,000
- Debt threshold: €3,400
- Deductible debt: €100,000 – €3,400 = €96,600
- Net assets: €350,000 – €96,600 = €253,400
- Exemption 2025: €57,684
- Taxable base: €253,400 – €57,684 = €195,716
You pay taxes on €195,716, not on the full €350,000, thanks to the deductible debt and exemption.
4. Calculating the notional return
4. Calculating the notional return
The Tax and Customs Administration expects you to generate a certain return on your assets, depending on how your assets are distributed across:
-
Savings (1.44% notional return)
- Example: You have €350,000 in savings
- Exemption in 2025: €57,684
- Taxable assets: €292,316
- Notional return: 1.44% of €292,316 = €4,209
- Payable tax: 36% of €4,209 = €1,515
So you pay €1,515 tax on your savings in Box 3, even though you merely kept that money in a savings account from which you would have hardly earned any interest.
-
Investing (5.88% notional return)
- Example: You have €350,000 in investments (e.g., vacation rental, stocks, crypto)
- Exemption in 2025: €57,684
- Taxable assets: €292,316
- Notional return: 5.88% of €292,316 = €17,184
- Payable tax: 36% of €17,184 = €6,186
In this case, you pay €6,186 in tax in Box 3.
-
Debt (–2.62%)
Example: €250,000 investments + €100,000 debt (Box 3 – 2025)
Step 1: Assets and exemptions
- Investments: €250,000
- Debt: €100,000
- Exemption: €57,684
- Debt threshold: €3,400 (2025, without partner)
- Deductible debt: €100,000 – €3,400 = €96,600
- Net assets: €250,000 – €96,600 = €153,400
- Taxable assets: €153,400 – €57,684 = €95,716
Step 2: Calculate notional return (estimated)
- Investments: €250,000 → 5.88% = €14,700
- Debts: €96,600 → –2.62% = –€2,531
- Total notional return = €14,700 – €2,531 = €12,169
Step 3: Payable tax
-
36% of €12,169 = €4,381
Conclusion
With a vacation rental worth €250,000 and €100,000 in debt, you would pay approximately €4,381 in wealth tax in Box 3 in 2025.
Without the debt, this would be over €5,000 — so you save around €600 in taxes due to the debt.
5. Tax calculation (36% in 2025)
5. Tax calculation (36% in 2025)
You will pay 36% tax on the calculated notional return.
The tax in Box 3 on my savings is much lower. Is it wise to invest in a vacation home?
Why investing in a vacation rental can be attractive — even with Box 3 tax and debt
It is true: the Box 3 tax on savings is relatively low at a notional return of 1.44% in 2025. But the question is: what do savings get you? Often less than inflation. A vacation rental, on the other hand, provides structural rental income (which is not taxed in Box 3), can increase in value over the long term, and offers the possibility of using it for vacations yourself as well.
In addition, a vacation rental can be financed with a loan (a Box 3 debt). This debt reduces your taxable wealth, which can significantly reduce your tax burden. So you convert your wealth into a tangible asset, rather than having it diminished by inflation.
Managing your assets wisely
By converting (part of) your savings into a vacation rental, you are shifting from low-yielding savings to an asset with potentially much higher returns. Moreover, with the right financing, you use debt as leverage, while your taxable capital decreases due to the debt you are allowed to deduct in Box 3.
Less tax, more potential
Instead of a notional return of 1.44% on your savings, you may have to pay tax on a return of 5.88% on your home. However, the actual return on a vacation rental is often much higher than the return on your savings, and because you finance part of the purchase with debt, you tend to pay less in taxes than you would expect.
If you would like to create an example for your specific situation, please feel free to contact us!
Four scenarios outlined for Box 3
Scenario 1 – €150,000 with tax partner
Scenario 1 – €150,000 with tax partner
Situation:
- Investments: Vacation rental with a WOZ value of €150,000 (e.g. vacation rental or investment portfolio)
- Exemption with tax partner: €115,368
- No debt
Calculation:
- Taxable assets: Vacation rental with a WOZ value of €150,000 – €115,368 = €34,632
- Notional return (5.88% on WOZ value): €2,036
- Tax (36% on notional return): €733
Difference compared to 2024:
- In 2024, the exemption was lower (€114,000). You would have paid approximately €783 at that time.
- Difference: – €50
Scenario 2 – €150,000 without a partner
Scenario 2 – €150,000 without a partner
Situation:
- Investments: Vacation rental with a WOZ value of €150,000
- Exemption: €57,684
- No debt
Calculation:
- Taxable assets: Vacation rental with a WOZ value of €150,000 – €57,684 = €92,316
- Notional return (5.88% on the WOZ value of the vacation rental): €5,428
- Tax (36%): €1,954
Difference compared to 2024:
- In 2024, you would have paid approximately €2,022 on this amount.
- Difference: – €68
Scenario 3 – €350,000 without debt or a partner
Scenario 3 – €350,000 without debt or a partner
Situation:
- Investments: €350,000
- Exemption: €57,684
- No debt
Calculation:
- Taxable assets: €350,000 – €57,684 = €292,316
- Notional return (5.88%): $17,184
- Tax (36%): €6,186
Difference compared to 2024:
- In 2024, you would have paid approximately €6.267 here.
- Difference: – €81
Scenario 4 – €350,000 in investments + €100,000 in debt, without a partner
Scenario 4 – €350,000 in investments + €100,000 in debt, without a partner
Situation:
- Investments: €350,000
- Debt: €100,000
- Debt threshold: €3,400 → Deductible debt: €96,600
- Exemption: €57,684
Calculation:
- Net assets = €350,000 – €96,600 = €253,400
- Taxable assets = €253,400 – €57,684 = €195,716
- Notional returns:
- 5.88% on €195,716 (taxable assets) = €11,503.50
- This notional return is calculated on the total taxable assets, which mainly consist of investments.
- Tax (36%): €4,141.26
Difference compared to 2024:
- In 2024, you would have paid approximately €3,576 here.
- Difference: +€566
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