*This article is applicable on Flemish legislation*
I know what you’re thinking: she’s throwing the boring tax word at me. Well it is a topic I certainly must cover because it has caused a lot of commotion on the Belgian real estate market lately. In general, there used to be 2 options a tax rate of 5% and one of 10%. Before I start, I’m already asking you to erase those two numbers from your memory, because they’ve been replaced with an alternatives that are considered to be more clear(?).
First things first, what is this tax I’m talking about? Deeds and scriptures need to be registered to be enforceable against third parties. I will now only focus on the registration of the authentic deed when purchasing real estate in Flanders (Belgium). The authentic deed must be deposited for registration by the notary at the competent Legal Certainty Office within 15 days from the date of signature. The obligation to pay also rests with the notary, but in practice the sum was paid by the buyer as part of the settlement at the time of the authentic deed.
In the past, the percentage was determined based on the value of the cadastral income. Because this method relied on outdated data processing, it was time for new regulations. The registration tax underwent a historic change in 2018, with the most memorable topic being "the 7% rate" for the purchase of the family home. Make no mistake, this rate is a taboo already today; this was further refined to 6% at the beginning of 2020 to compensate for the abolition of the controversial “woonbonus” (translated as housing bonus).
Sole family home
Note: the rate of 6% is only applicable to your one and only family home. What does this mean in concrete terms:
you can not be the full owner of a house or land in or outside of Belgium
the real estate is an existing house (not land) located in the Flemish Region of Belgium
you will use this house as your main residence within 3 years (in other words, take the registration in the population register of the municipality where the real estate is located)
you buy it as a natural person (not a company)
only pure sales transactions are eligible; no pledge taken out of the company, no exchange ...
Whether you qualify for reduced taxes is determined per individual in the purchase, so you may enjoy reduced rates whilst your partner may not. For example, because they already acquired real estate from an inheritance.
In summary, what is excluded: second (third) residences, investment goods, building land, commercial real estate ... Anything where the domicile is not established. These are taxed under the registration rate of 10%.
Well you would think now, there are 2 options left: 6% and 10%. But we are not going to stop there, there are still several exceptional regimes.
Exceptional reduction for modest homes
Family homes up to and including a sales price of 200,000 euros enjoy a tax reduction of 5,600 euros, for real estate located in the Flemish core cities (like Antwerp) and the peripheral municipalities, the sales price can rise to 220,000 euros.
Severe energy-efficiency renovation
For real estate, only qualified as the main family home, that will be radically renovated in an energy-saving manner within 5 years, a more favorable tax rate of 5% is applicable.
For the purchase real estate, as the only private family home, that is included in the inventory of the immovable heritage, you only pay 1% registration fee. It is to say; you have to invest the other 5% spread over 5 years in the preservation or revaluation of the heritage elements in the building.
Licensed professional sellers pay 4% registration tax. When are you a recognized professional seller?
a professional statement must be submitted to the Flemish tax authorities
a deposit must be provided in the form of a bank guarantee.
This deposit must be provided so that any sales duties due can be charged on this amount if you do not continue to meet the conditions to qualify as a professional seller:
at least 3 resales must be completed within 5 years
any real estate that is purchased under this rate must be sold no later than on the 31st of December of the 8th year following the purchase
If the conditions are not met:
the other rights (6%) become due and payable
a tax increase of 20% on these other rights
Purchase of social housing
As a buyer in need of housing, you can purchase a house through the Flemish Social Housing Company or through a recognized social housing company. Of course for own use only them, here you enjoy a reduced rate of 1.5%.
Purchase of a house with the aim of serving for social rental
As a natural person, you can purchase a house in full ownership in the form of a pure transaction and then conclude a rental contract with a minimum term of 9 years with a recognized social rental agency. You are entitled to a reduced rate of 7%.
Better known as "the fiscal backpack". The registration tax paid for during the purchase of house 1 can be detucted from the tax due with the purchase of house 2. The condition is that the registration tax was paid with the purchase of house 1, so it does not count if this was obtained from, for example, an inheritance. In addition, the buyer must be a natural person, companies are excluded. And an extra important point is that both houses must be located in the Flemish region of Belfium.
We have 2 forms of portability that apply to an existing home as well as a home yet to be built (building land).
Portability through return
house 2 is bought before the sale of house 1
the buyer used house 1 as his main residence in the 18 months before the purchase of house 2
the sale of house 1 must be completed within 2 years after the purchase of house 2 (or 5 years for building land)
House 2 must serve as main residence within 2 years after the purchase (5 years for building land)
Portability through settlement
House 2 is bought after the sale of house 1
The buyer used house 1 as his main residence during 18 months before the sale
The purchase of house 1 must be completed within 2 years after the sale of house 1 (also for building land)
House 2 mist serve as main residence within 2 years after the purchase (5 years for building land)
The amount of the transferability cannot exceed 12.500 euro and is personally examined per purchaser and calculated on his personal share in the purchase / sale.
So, a whole bunch of info that I actually cannot summarize in a nutshell. Or maybe to simply put it like this; 10% is the norm and all the other rates are conditioned.
I hope it is clear, if not we will keep in touch!
All the best,