Interest payments on mortgages are tax deductible if your property is used as the primary residence and you are registered as a resident taxpayer. For instance, if you pay 1 000 euros interest per month and your income tax level is 42%, you receive back 420 euros per month! You can arrange to receive this every month by filling in a special form (voorlopige teruggaaf at www.belastingdienst.nl), or as one payment at the end of the year.
Expenses related to the closure of the mortgage are tax-deductible. In terms of the notary, costs to conclude the contract are also tax deductible, only the costs of transfer are not. Therefore, the commission (1%) for the bank and the valuation report asked by the bank are also tax-deductible, as are the notary costs related to the mortgage.
Transfer tax is currently 2%. This temporary rule will run up until the end of June 2012 and the government may decide to prolong this ruling. Transfer tax used to be 6% and is not deductible.
Any increase in the value of your house is tax-free if you use it as a primary residence as there is no capital gains tax, but it can have an impact on the amount of interest deductible mortgage if you use the profits to purchase your next home.
Tax will be levied on the ‘deemed rental value' of the house (compared to the deductions allowed for interest, this amount is very low). The value is based on a small percentage of the value of the house, estimated by the local municipality (WOZ value) and will be used by the tax authorities.
When you leave the country and keep your house in Holland, the interest tax deductions disappear as they are based on residency and living in the house. This means that if you decide to rent out your place and move to another house somewhere else in the Netherlands or abroad, the tax deductions go as well. The rent you receive will not be taxed either.
Source: http://www.expatica.com/nl/housing/buying/Tax-advantages-for-expat-house-buyers_15139.html