The Tottenham boy was initially a hit at Craven Cottage but has found minutes hard to come by of late under Magath.
The relegated Cottagers will need to revamp their squad ahead of the Championship next season and Holtby will definitely not be part of that.
Magath claims the German is not a fighter and the loan move across London was not right for him this season.
“Lewis is a very skilful and a nice player but he is not a fighter – I think it was not the right move for him,” Magath said.
“I think he has put too much pressure on himself.
“Against Hull it was not him who was playing and against Stoke it was even worse.
“It was too early, he came here for a chance to go to the World Cup but after a few weeks it was clear it wasn’t working.
“It was not the right decision for him.”