Vacation Home Return on Investment: How to Calculate Your Net Profit
There are two ways to invest in a vacation home: you can purchase a vacation home yourself, or you can invest through a real estate fund. Both approaches generate returns from vacation real estate, but they differ significantly in terms of tax treatment, management burden, and diversification. Which approach is right for you? In this article, we’ll Goldberg Gardens I the differences between buying directly and investing through a fund such as Goldberg Gardens I , so you can make an informed decision.
What is the return on investment for a vacation rental?
The return on a vacation home is the ratio between the annual income it generates and the amount you have invested in it, expressed as a percentage. It consists of two parts: the direct return from rental income and the indirect return from appreciation in value.
The direct return comes from rental income, after deducting operating expenses. The indirect return results from an increase or decrease in the property’s value over the period you own it.
A common mistake is to look only at the gross return. The gross return shows rental income before expenses and taxes. Only after you subtract those will you see what’s actually left.
How is the return on a vacation rental calculated?
You calculate the return on a vacation home by dividing the annual income by your total investment and multiplying by 100. The difference between gross and net is due to the costs and taxes you factor in.
The basic formula for the gross return is:
Gross Return = (annual rental income ÷ total investment) × 100
To calculate the net return, first subtract all expenses from the rental income:
Net return (direct, before taxes) = ((rental income excluding VAT − annual operating costs) ÷ total investment) × 100
The total investment is more than just the purchase price. Be sure to factor in additional costs, such as transfer tax, consulting and notary fees, and any furnishing expenses. For an existing vacation home you own, the transfer tax is 8%, which directly reduces your initial return.
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What costs are deducted from the gross return?
To calculate the actual net return, subtract all recurring expenses from the rental income. Many investors underestimate these expenses, which means the actual return is lower than expected.
The main factors that negatively impact returns on an owner-occupied vacation home are:
Management and rental fees, such as the commission charged by a rental agency or booking platform
Maintenance, including both minor daily maintenance and major periodic maintenance
Fixed expenses, such as insurance, parking fees, municipal taxes, and utilities
VAT on lodging, which will increase from 9% to 21% as of 2026 and will reduce your net rental income if you are unable to pass it on to the tenant
Vacancy, because it isn't rented out every night
Please note that maintenance and management costs in Box 3 are not deductible when calculating your actual return. So while you do incur these costs, they do not reduce your taxable return.
What is the actual return on a vacation home classified under Box 3?
The actual return in Box 3 consists of the rental income received plus the increase or decrease in the value of the home, less any interest paid on Box 3 debts. Other expenses, such as maintenance and management costs, may not be deducted.
Since the Supreme Court’s rulings in 2024, Box 3 income may also be calculated based on the actual return. If you report your actual return, the Tax Authority will automatically apply the method that is most advantageous to you (flat rate or actual). The flat rate for investments and other assets is 6.00% in 2026.
For a vacation home, the additional tax liability for personal use has also applied since 2026. When calculating the actual return, you must add an amount for the period during which the home is available for your personal use. You may choose between the economic rental value or 5.06% of the WOZ value. The Tax Authority assumes that the home is available to you every day that it is not rented out.
You can read a full explanation of flat-rate versus actual returns in our blog post about Box 3 in 2026.
What is a realistic net return on a vacation home?
A realistic net return is lower than the gross return listed in sales brochures, because costs, vacancies, and taxes reduce the return. The exact amount depends on the location, the occupancy rate, the financing, and your tax situation.
Therefore, be critical of any stated return on investment. Always ask whether the figure is gross or net, what the returns are based on, whether all costs have been included—including provisions for major maintenance and the VAT increase—and whether the additional tax liability for personal use has been factored in. A gross return on investment that does not include these items paints an overly optimistic picture.
Because maintenance, management, and the additional tax liability for personal use are entirely your responsibility when purchasing directly, the net return on owning a vacation home can often turn out to be lower in practice than initially estimated.
How does a fund structure affect the calculation of returns?
With a real estate fund, all operating costs are already factored into the projection, so the return you see is closer to the actual net return. You don’t have to estimate all the cost items yourself.
A fund such as Goldberg Gardens I has challenged all revenue projections and compared them with various reference parks at Landal, incorporating all costs into the projection, including operating expenses, rental and management costs, financing, and major maintenance. The tax implications are also different: you are investing in vacation homes that are yet to be built, which means the investment is primarily subject to VAT—which is deductible at the fund level—rather than transfer tax.
You can calculate the return on a vacation home by comparing rental income and appreciation against your total investment, and then subtracting all costs and the tax in Box 3. Would you like to explore the broader considerations between direct ownership and investing in a fund? You can read about that in our blog on investing in a vacation home.
Frequently asked questions
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The return on a vacation home is the annual income from rentals and appreciation, relative to your total investment, expressed as a percentage. It consists of a direct return from rentals and an indirect return from appreciation. The net return is lower than the gross return because costs, vacancies, and taxes reduce the income.
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You calculate the return by dividing the annual income by your total investment and multiplying by 100. To calculate the gross return, use only the rental income. To calculate the net return, first subtract all costs and taxes. Be sure to include additional costs, such as the 8% transfer tax, in the total investment.
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The gross return is the rental income divided by the investment, excluding costs. The net return is what remains after you’ve deducted management fees, maintenance costs, fixed expenses, VAT, and taxes. The net return provides a more realistic picture of your actual income.
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The actual return in Box 3 consists of rental income and any increase or decrease in value, less interest paid on Box 3 debts. Maintenance and management costs are not deductible. Since 2026, an additional tax liability for personal use has also applied to vacation homes, based on the economic rental value or 5.06% of the WOZ value.
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The main cost items are management and rental expenses, minor and major maintenance, fixed costs such as insurance and parking fees, VAT on lodging, and vacancy costs. If you own your home, you are fully responsible for these costs. With a real estate fund, they are typically already factored into the projections.
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