If real estate changes owner, registration tax and more specifically sales tax must be paid. The rates of this tax differ per region. The Flemish government announced a change from January 1, 2022 on Monday.
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What changes for those who buy a family home for the first time?
Today, anyone who buys a family home pays 6 percent sales tax. That will be 3 percent. That’s good news for first-time owners. It does not matter whether you buy a house, apartment or villa. The ‘family home’ is the only house or apartment where the buyer will live.
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For an apartment of 250,000 euros, the reduction in registration fees results in a saving of 7,500 euros.
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Many experts agree that real estate prices will not fall due to the new rules.
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Conditions have always been attached to the lower rate for the family home. The biggest pitfall is that you are not allowed to be the full owner of another house or building plot. ‘If you have other real estate, you will receive the preferential rate if the other real estate is sold within the year,’ says Flemish Minister of Housing Matthias Diependaele (N-VA).
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In addition, you must live at the address within two years. Can’t make it to that date? You then not only have to pay the difference between the registration tax already paid and the sales rate of 12 percent, but also a fine on top of that amount. You can only escape these sanctions in the event of force majeure.
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Is there an extra discount for those who buy a modest family home?
You can get an extra discount on the registration tax for your only ‘modest’ home. It concerns a house or apartment with a maximum purchase price of 200,000 euros. For homes in 16 core cities – including Antwerp, Ghent and Leuven – or the Flemish Periphery around Brussels, the ceiling is 220,000 euros. Because the registration fees due fall by half, the extra discount is also halved, from 5,600 to 2,800 euros.
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What changes for those who exchange their starter home for a new family home?
The reduction in registration fees is not limited to the first home, but also applies to later family homes (after the first one has been sold). But there is also bad news: anyone who sells a first family home to buy another will no longer be able to enjoy the portability of the registration from 2024. This means that previously paid registration fees can no longer be deducted from the registration tax on the new purchase. The advantage of portability can be up to 13,000 euros.
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There will be a transitional arrangement until the end of 2023, and buyers can choose between the reduced rate of 3 percent and portability in combination with 6 percent registration fees. The most economical choice depends on the situation.
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Is energy-efficient renovation being encouraged?
Buying an outdated home and undergoing extensive energetic renovation is more strongly encouraged. The rate of registration duties will drop from 5 to 1 percent. For those who buy a house for 250,000 euros, this provides an advantage of 10,000 euros.
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On top of this, the discount can be added for those who buy a home for a maximum of 200,000 euros (220,000 euros in the core cities). ‘The amount falls, in proportion to the new lower rate, to 960 euros. The idea is that we will continue to exempt the same tranche of the purchase price from registration tax’, says Diependaele. Anyone who buys a home for 200,000 euros has an advantage of 4,160 euros under the new scheme. The renovation must, however, meet a number of conditions.
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What changes for those who build a house?
Anyone who buys land to build on will soon be worse off. You have to pay registration duties on the purchase price of the building land. That rate will increase from 10 to 12 percent. 21% VAT must be paid unchanged on the construction works. A reduced VAT rate of 6 percent applies throughout the country until the end of 2022 for the demolition and reconstruction of the sole and owner-occupied home.
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It is striking that new construction is penalized, although the focus is on energy efficiency.
Johan Krijgsman
CEO broker network ERA Belgium
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‘It is striking that new construction is being penalized, now that the focus is on energy efficiency. However, new-build homes must meet strict energy requirements’, says Johan Krijgsman, CEO of the real estate network ERA Belgium.
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What changes for those who buy a second residence, investment property or professional real estate?
For real estate other than the family home, the rate of registration duties is 10 percent. That will be 12 percent. This increases the tax on the purchase of a second residence, a house or apartment to rent out, an office, shop or warehouse. Are you buying a second residence for 300,000 euros? The registration fees due increase from 30,000 to 36,000 euros.
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‘The existing favorable arrangements for social housing and for protected monuments will remain unchanged,’ says Diependaele.
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Will real estate prices fall?
‘Real estate prices will certainly not fall,’ says Krijgsman. Many other experts share that view. “The increase in registration fees from 10 to 12 percent will not make investors stop buying,” says Frédéric Vandenhende of Investr, a platform for real estate investors. Young families will receive support from the measure, but it is questionable whether this will not be reflected in the prices.
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‘Due to the new rules, the pressure on the market may increase further. For first homes, this will happen after 1 January 2022. It will be a very interesting period for sellers of second homes until the rules come into effect’, says Cédric Vanhenxcthoven, director of Heylen Vastgoed.
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Can I anticipate the new rules?
Whether a sale took place before or after January 1, 2022 depends on the signing of the deed of purchase at the notary.
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Anyone who reaches an agreement with the seller today can in theory already benefit from the lower registration fees.
Bart van Opstal
Spokesperson notary.be
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Buyers of a family home will only want to have their deed of purchase expired after the New Year, in order to benefit from the reduction. ‘Whoever reaches an agreement with the seller today can in theory benefit from the lower registration duties. The maximum term for signing the deed of sale is four months’, says civil-law notary Bart van Opstal, spokesperson for notaris.be. Buyers of a second residence or an investment property will want to have their deed executed before the new regulation.
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Will there be consequences for the rental market?
‘A lot of work is being done on the investment market. But the rental market must be kept attractive in order to keep rents under control’, says Filip Dewaele, managing director of Dewaele Vastgoed.
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‘There is a great shortage of rental housing in an affordable price category. How will the Flemish government prevent investors in rental housing from giving up?’, says Kristophe Thijs, communications director of CIB Flanders.
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