In principle, 2% transfer tax is due on the acquisition of a dwelling, while the 6% rate applies to non-residential property. It has been noted in parliamentary history that a dwelling is defined as immovable property intended for residential use by its nature at the time of the legal transfer.
Question of law and importance
The Zeeland-West-Brabant District Court had to decide whether a former office building qualified as a dwelling due to work carried out. A buyer had bought several apartment rights on four floors in a former office building that was no longer in use as such. The four floors were divided into separate rooms that could be locked. In some rooms there was a sink. On each floor there was also a unit with toilets. On the first floor there was a large kitchen. Prior to delivery, the seller placed a central shower facility on each floor and a kitchen unit in several rooms per floor. In dispute was whether these changes had made the building a dwelling at the time of delivery so that the 2% rate applied.
Assessment by the District Court
The Zeeland-West Brabant District Court ruled that the property did not qualify as a dwelling. According to the Court, the changes were not such that the floors were no longer suitable for use as office space, let alone that the changes were such that anything more than limited adjustments would be necessary to make the floors suitable as office space again. The apartment rights had retained their non-residential nature. The appeal was declared unfounded.
Logically, there has been an increase in proceedings regarding 2% or 6% transfer tax for transformation projects. The test of whether a building has ‘changed’ from a non-residential into a residential building is apparently very factual. According to the District Court, one should not think too lightly about the adjustments that need to be made to transform a building into a dwelling for the purpose of levying transfer tax. The next news item is about another transformation project that, according to the Court, can indeed benefit from the 2% rate.