Buying a house

Buying a home is more than just a mortgage

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Buying a home is a monumental occasion, whether you’re starting fresh in a new Belgian city or building your dream house in the town that you fell in love with.

While buying a home in Belgium is an exciting life decision, it is also an expensive one. Most people can’t afford to purchase a home outright and need a bank’s assistance. Once that hurdle is cleared, there are the many fiscal implications of dealing with a large financial decision that most people aren’t equipped to handle.

Lien Verdoodt, an estate planner at BNP Paribas Fortis, can help you understand the financial tax realities and challenges of being the proud owner of that dream home in Belgium. Her mission is to assist private banking clients with the legal and tax structure of their movable and immovable assets.

Buying a house in Belgium

Lien says that buyers must make a written agreement between the buyer and the seller, which is normally sorted out by the real estate agent or a notary. The moment this agreement is signed, she says, the property is considered sold even though money has not changed hands.

“This first agreement is necessary to get a loan at a bank,” she explains. “In two to four months, that agreement will be confirmed and notarised, making the house officially registered in Belgium for all mortgages and taxes.”

Buying a house in Belgium

Securing a mortgage in Belgium

As for the actual monetary amounts required, Van Roy indicates that banks normally ask for about 20%; there isn’t a legal minimum or maximum, just a standard that is used. If you’re interested in more information about Belgian mortgages, such as establishing good credit and how loans are approved, speak to a lending officer at BNP Paribas Fortis.


BNP Paribas Fortis offers a comprehensive network of specialised branches for expats, with extended opening hours. Their specialist multilingual advisers are happy to answer all your questions whenever it suits you best.

 

Belgian property taxes

It is clear that once you buy a house in Belgium, there are various taxes associated with it. However, this varies immensely based on numerous elements, such as location (Wallonia, Brussels or Flanders), and the value of the home.

The registration tax is a flat rate paid to the government for buying a home. In Flanders, the registration tax is 10%. This tax can be reduced to 7% when you buy your only family residence (even 6% if you do home improvements to save energy). In both Brussels and Wallonia, the registration tax is 12.5%. However, there is a lower rate available of 6% in Wallonia if the home fits the definition of a modest residence. In Brussels the first part of 175,000€ of the selling-price is exempt of registration tax. This is a reduction of 21,875€ (when the selling price-value is less than 500,000€).

During your stay in Belgium, you’ll be annually taxed on the possession of a Belgian property. First, you’ll pay an annual advanced levy; each region has its own rules regarding the taxes. Second, all immovable property, such as a house, generates taxable income that has to be declared in your annual income tax return, except if it is considered your main residence.

Property in Belgium

Filing your Belgian taxes as a homeowner

This is a lot to take in, especially for an expat who might not be as familiar with the nuances of Belgian tax law — but  Lien Verdoodt says you’re not alone in being overwhelmed.

 “From the moment you have more than professional income, such as a home, it gets difficult to file taxes for yourself,” she says. “Then, if you add in elements that might offer tax breaks, such as a mortgage loan, you really need help to file taxes in Belgium.”

She breaks down the various elements, starting with the progressive tax tariff, explaining that “the more income you have, the more you pay in taxes. The maximum is fixed at 50%. Whether the income is from property or a professional salary, it’s all taxed together.

 “The way you are taxed depends on the use of the property,” she explains. “If you have a second residence on the coast, it will be taxed differently than if it’s used for professional use or as your main residence. It’s all very specific. You need someone to help you, as the rules can be very difficult.”

And she would know: “I had to go to school for two years in Brussels to understand all this. I specialize in the Flanders region. My colleagues and I each have our own regions, in order to know the rules and peculiarities a little better, such as with the annual advanced levy. For example, if you have at least two children for whom you receive a children’s allowance, you receive a reduction. If you have a handicap, you receive a reduction. But these reduction amounts change per region and even per year.”

As for the income tax return, Lien says, “This is your annual personal tax return and within this is where you would mention taxable immovable income, e.g. a house plus all your immovable property (except your main residence); all professional income; and income from movable property (savings), plus various income elements, such as the concession on the right to install mobile devices. This is also where you would put your reductions.

“But the reductions are on various pages of the tax form — to make it easy!” she jokes.

Selling your property in Belgium

“As for selling your home,” she continues, “you don’t have to pay any back taxes. All reductions received stay and no new calculations are required. If you sell the family home or a house more than five years after you purchased it, no taxes are required no matter how much profit is made. However, if you sell a house (not the family house) in fewer than five years, you will pay 16.5% on the adapted added value — this is the difference between the price paid and the price sold taking into account certain costs and inflation.”

Whether you’re eyeing your dream home, looking to purchase that coastal property or trying to get your financial affairs in order, contact your local BNP Paribas Fortis office. Experts such as  Lien Verdoodt are on hand to untangle the technical jargon, simplify and explain the specific tax laws related to your situations, and assist you in making the right financial decisions when purchasing property in Belgium.

 

 

 

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