Before 1 June 2018: the tax for the purchase of a home (registration tax) used to be determined by the home’s notional income base *. For houses with a notional income base of more than 745 euros, you paid a 10% registration tax (the higher rate). If you bought a house with a notional income base of less than 745 euros and met certain conditions, you only paid a 5% registration tax (the lower rate); for families with more than two children, the notional income base threshold amount increased with the number of children. Use could also be made of the three Flemish abatements (reductions): the standard abatement (a tax-free threshold of 15,000 euros on which no registration tax had to be paid), the additional abatement and the renovation abatement.
New scheme from 1 June 2018:
- the notional income base is being scrapped as a determinant of the registration tax rate!
- There is a uniform rate of 7% for the ‘sole family home’ with a discount for small homes.
- The existing abatements have all been scrapped.
Conditions for the new rate of 7%:
- Home purchased only by one or more individuals;
- A pure purchase transaction (no exchanges, withdrawals from companies or waivers of undivided rights);
- The intention to establish a family home within two years after the date of the notarised deed;
- The totality of the asset must be held in full ownership;
- The buyers may not individually or jointly hold a house or building land (for a sole home) in its totality (100%) in full ownership in Belgium or abroad. Holding a house or building land in its totality in full ownership that has been acquired from the estate of a relative in the ascendant line (e.g. parents) also prevents the application of the 7% rate. Exclusion from the benefit (7% instead of 10%) in the case of prior real estate is assessed per acquirer/buyer;
- Ownership of a property which in principle prevents the application of the reduced rate at the time of the purchase is not a problem if the buyers undertake to dispose of the property within one year from the date of the new purchase.
Note: if you buy a building plot, commercial property, second home, etc., you will be liable to pay 10% registration tax. The 10% rate is also charged for new-build homes to which the VAT regime applies (on the land share if purchased from a party other than the developer).
Reduced rates of 6%: a family home that undergoes major energy renovation work within five years of purchase is subject to 6% registration tax instead of 7%. Note: Certain additional conditions apply here. Discount for small homes up to a maximum of 200,000 euros: if the purchase value does not exceed 200,000 euros, there is an additional tax benefit of 5,600 euros (for 7%) and 4,800 euros (for 6%). This ceiling is raised to 220,000 euros for purchases in some cities (the Flemish periphery around Brussels and the so-called core cities).
* The notional income base is the average normal net income that the property would yield to its owner during one year. In other words, the property’s average annual net rental value at the reference time.