A woman is selling her home. In the same year, she enters into a provisional purchase agreement for a new home. This is completed the following year, in January. In January, the woman transfers the purchase price in three instalments to the notary’s escrow account. In her income tax return, she declares her bank, current account and savings balances. She later claims that she wrongly failed to include a Box 3 liability for the purchase of the new home.
Box 3 debt?
The court has ruled that the proceeds from the sale of the property form part of the basis of assessment in Box 3. The court finds that the woman may not set off the money in her bank account against a debt of the same amount arising from the purchase of the new property. According to the court, the purchase agreement gives rise not only to an obligation to pay, but also to a right to the transfer of the property. These two elements are inextricably linked. The obligation to pay the purchase price cannot therefore be classified separately as a debt in box 3.