When you buy real estate in Brussels (and in Belgium in general), you need to pay a 12.5% transfer tax on the purchase price due the passing of the ownership title from the seller to the buyer.
In Brussels, as a first-time homeowner you can be eligible for a transfer tax reduction, the so-called ‘abattement’. No transfer taxes are due on the first €175,000 of the price when purchasing your first property. In other words, you are granted a tax saving of max. €21,875 (€175,000 x 12.5%).
We already discussed the specifics of this regime in previous articles, in which we focused on your eligibility in case of simultaneous ownership of real estate abroad and the risk of being fined if you need to leave the property before the minimum 5-year period.
We have learned that some important changes are coming to the Brussels regime as from 1 April 2023. What we present here is only a draft version, and is still subject to further approval.
- Currently, the total acquisition price of the property may not exceed €500,000. This will be increased to €600,000 as of next year.
- The allowance itself will be increased from €175,000 to €200,000. The means that the tax saving will increase to €25,000 (€200,000 × 12.5%), instead of €21,875 now. A different threshold applies to unbuilt land, but the tax allowance here will also increase.
- Currently, the owner needs to register at the property within 2 years and remain registered for 5 years. The period to establish your residence at the premises will be extended to 3 years as of 2023.
- If you leave the property within 5 years after registering, you currently need to refund the full tax benefit (max. €21,875). This will change as well next year. Repayment only needs to be made in proportion to the remaining period after departure up to the five-year anniversary.
- As of 2023, there will be an additional tax benefit (‘reno-abattement’) for those who make their property more energy efficient. For each improvement in energy class (with a minimum of two extra energy classes), you get an additional tax benefit. The allowance will be € 25,000 for each additional energy class (or a tax benefit of €3,125 per extra class).
Finally, the above changes are included in a draft proposal of 19 September 2022 that updates the conditions for the abattement. The new rules would apply as from the date of the preliminary sales agreement (‘compromis’) and not the actual notary deed.
In addition to these changes, it would be an ideal opportunity for the Brussels legislator to make sure the system is compliant with the recent remarks of the Belgian Constitutional Court. This is unfortunately not yet provided for in the above proposal.