Housing tax for the 2018 fiscal year

Soon, the first deadlines for the 2018 tax declaration will be here. If you opt for a declaration via Tax-on-web, you have until Thursday 12 July. Otherwise, your declaration must be sent by post before Friday 29 June 2018. And if your accountant is in charge of filling it in, the deadline is 25 October. In any case, for many Belgians, property constitutes an essential part of their declaration. This article takes a close look at the different tax benefits linked to property.

THE ROLE OF PROPERTY IN A TAX DECLARATION

THE FAMILY HOME

Property entitles you to many tax benefits. Home ownership is above all interesting in this respect. In concrete terms, you receive a tax benefit in the framework of the housing bonus, homebuyer savings plans or long-term savings. Note that, for the past few years, housing taxation related to ‘home ownership’ is a regional matter. The year during which your loan was taken out determines your tax benefit.

The property income of your own home is usually exempt from personal income tax. However, some exceptions do exist. You will find them here.

PROPERTY OTHER THAN THE FAMILY HOME

A second dwelling, such as a second residence or an investment property, may also provide you with a tax benefit in the (federal) long-term savings plan. However, in this case, the possible home ownership tax benefit is taken into account. 

If you use the property as a second residence, you must declare the property income. In concrete terms, you must mention the non-indexed cadastral income in your declaration. The taxable property income is the indexed cadastral income, increased by 40%.

FOREIGN PROPERTY

Belgium has signed a double taxation treaty with many countries, including the Netherlands, France and Spain. Thanks to this, you are only taxed in the country where your dwelling is located, and therefore no longer in Belgium. If you rent out the dwelling, you must declare the rental income, but you can deduct the taxes paid abroad. A further 40% is deducted for fixed costs, and the balance must be added to your other income to determine the applicable rate, which is referred to as the progression method.

If you own a dwelling in a country with which Belgium has not signed a double taxation treaty, you must declare the real rental income (or the gross notional rental value). You can deduct the taxes which you pay abroad from this.

TAX BENEFIT OF THE FAMILY HOME

Furthermore, there is the recurring concept of ‘one's own home’. This refers to the dwelling in which a person lives.

Capital amortisation and the interest on a mortgage loan as well as the related outstanding balance insurance premiums are taken into consideration for the housing bonus. This depends on the region where you live.

MORTGAGE LOANS TAKEN OUT BEFORE 2005

The capital amortisation of a housing loan and the outstanding balance insurance premiums are taken into consideration for the tax benefit in the ‘homebuyer savings’ plan.

TAX BENEFIT ON INTEREST

A standard interest deduction and an additional interest deduction exist. For this, the cadastral income is taken into account.

TAX BENEFIT ON CAPITAL AMORTISATION

For your own and sole home, you can add capital amortisation to your homebuyer savings plan. Otherwise the long-term savings tax benefit applies (see below).

Residence

Maximum deduction

Tax benefit

Flemish Region

According to net professional income, but max. €2,280

Marginal tax rate

Walloon Region

According to net professional income, but max. €2,280

Marginal tax rate

Brussels Region

According to net professional income, but max. €2,280

Marginal tax rate

MORTGAGE LOANS TAKEN OUT BETWEEN 1 JANUARY 2005 AND 31 DECEMBER 2014

Since 1 January 2015, the regions have been responsible for the housing bonus, which means that the systems in Flanders, Wallonia and Brussels are no longer the same. Before this date, the housing bonus was a federal matter. Those who bought their property before this date benefit from a tax credit calculated according to the reimbursement of the loan, in proportion to the borrower's income. This credit ranges from 30% to 50%.

Residence

Maximum deduction

Tax benefit

Flemish Region

Former Flemish housing bonus:

€2,280 (basic amount for own and sole home)
+ €760 (for the first 10 years for own and sole home) 
+ €80 (three or more children when the loan was taken out, for the first 10 years) 

These amounts are the same for the 2019 fiscal year.

Marginal tax rate. The maximum tax credit is €1,560 per borrower (€3,120 x 50%).

Walloon Region

€2,290 (basic amount for own and sole home)
+ €760 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

These amounts are the same for the 2019 fiscal year.

Marginal tax rate. The maximum tax credit is €1,565 per borrower (€3,130 x 50%).

Brussels Region

€2,350 (basic amount for own and sole home) 
+ €780 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

For the 2019 fiscal year, these amounts are:
€2,400 (basic amount) 
+ €800 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

Marginal tax rate. The maximum tax credit is €1,605 per borrower (€3,210 x 50%).

The marginal tax rate is the highest tax percentage which you pay on your income; it amounts to a minimum of 30% and a maximum of 50%.

For a dwelling which is not a person's own home, it is once again the (federal) long-term savings tax benefit which applies (see below).

MORTGAGE LOANS TAKEN OUT IN 2015 

Residence

Maximum deduction

Tax benefit

Flemish Region

€1,520 (basic amount for own and sole home) 
+ €760 (for the first 10 years for own and sole home) 
+ €80 (three or more children when the loan was taken out, for the first 10 years) 

These amounts are the same for the 2019 fiscal year.

40%. 

The maximum tax credit is €944 per borrower (€2,360 x 40%).

Walloon Region

€2,290 (basic amount) 

+ €760 (for the first 10 years, in the case of sole home) 
+ €80 (three or more children, for the first 10 years) 

These amounts are the same for the 2019 fiscal year.

40%

The maximum tax credit is €1,252 per borrower (€3,130 x 40%).

Brussels Region

€2,350 (basic amount for own and sole home) 
+ €780 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

For the 2019 fiscal year, these amounts are:
€2,400 (basic amount for own and sole home) 
+ €800 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

45%

The maximum tax credit is €1,444.50 per borrower (€3,210 x 45%).

For a dwelling which is not a person's sole home, it is once again the long-term savings tax benefit which applies.

MORTGAGE LOANS TAKEN OUT AS OF 1 JANUARY 2016 FOR THE FLEMISH REGION AND THE WALLOON REGION, AND IN 2016 FOR THE BRUSSELS REGION.

Flemish Region: If you live in Flanders, new loans fall under the integrated housing bonus. This applies to the home you own, regardless of whether it is your sole home. The integrated housing bonus allows you to receive a tax benefit of 40%. This tax benefit is granted as a basic amount of €1,520 and covers capital amortisation, interest and outstanding balance insurance premiums. This ceiling may be increased up to a maximum amount of €2,260 if you borrow for your ‘sole’ dwelling for the first 10 years of this loan (+ €760) and if you have at least three children (+ €80) when the loan is taken out. A person who borrows for their sole home may save up to €944 in tax (+ municipal tax). For those who already own another dwelling, the tax savings amounts to a maximum of €608 (+ municipal tax).

However, it must be borne in mind that if you declare your credit in the framework of the integrated housing bonus, you will lose all of your tax benefits for previous outstanding loans. It would therefore be a good idea to determine whether or not this would be financially beneficial.

Walloon Region: for loans taken out as of 2016, the housing bonus has been replaced by the housing rebate. The tax credit depends on the net taxable income and amounts to a maximum of €1,520 per taxpayer per year. A person who earned a maximum of €21,347 in 2017 (€21,733 in 2018), receives the biggest benefit, i.e. a housing rebate or a tax credit of €1,520. The greater the income, the lower the tax benefit. For dependent children, there is a flat-rate increase of the housing rebate of €125. A person who earned more than €82,339 (€83,828 in 2018), does not receive a tax benefit. The amount of the housing rebate is however limited to the sum of the interest and the capital amortisation for the mortgage loan and the outstanding balance insurance premiums paid during the year concerned. You are entitled to a maximum of 20 housing rebates throughout your life. The amount of these decreases by half after 10 years. 

Residence

Maximum deduction

Tax benefit

Flemish Region

Integrated housing bonus:

€1,520 (basic amount, family home) 
+ €760 (for the first 10 years for own and sole home) 
+ €80 (three or more children when the loan was taken out, for the first 10 years for own and sole home) 

These amounts are the same for the 2019 fiscal year.

40%.

The maximum tax credit is €944 per borrower (€2,360 x 40%) for a sole home.

 

For a person who already owns another dwelling, the tax savings amounts to a maximum of €608 (€1,520 x 40%).

Walloon Region

Housing rebate:

For your own and sole home (in other words, the family home) and according to your net taxable income:

 

less than €21,347 (€21,733 for the 2019 fiscal year)

The tax credit is €1,520 + €125 per dependent child.

between €21,347 and €82,339
For the 2019 fiscal year, between €21,733 and €83,828

The tax credit is less than €1,520 and is calculated as follows: 

€1,520 – ((net taxable income – €21,347) x 1.275%) = your tax benefit
+ €125 per dependent child.

higher than €82,339 (€83,828 for the 2019 fiscal year)

No tax benefit, even if you have dependent children.

Brussels Region

€2,350 (basic amount for own and sole home) 
+ €780 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

For the 2019 fiscal year, these amounts are:
€2,400 (basic amount for own and sole home) 
+ €800 (for the first 10 years) 
+ €80 (three or more children, for the first 10 years) 

45%

The maximum tax credit is €1,444.50 per borrower (€3,210 x 45%).

 

LOANS TAKEN OUT AS OF 1 JANUARY 2017 FOR RESIDENTS OF THE BRUSSELS REGION

For mortgage loans taken out as of 2017, the Brussels housing bonus has been removed and replaced by an increased exemption from registration fees. Under certain conditions, there are no registration fees in the first bracket (€0 - €175,000). This'allowance'on the registration fees provides an advantage of €21,875. However, there is no longer an exemption for dwellings of a value of €500,000 or more.

The (federal) long-term savings benefit remains fully available.

REFINANCING

For refinancing, nothing changes. If you refinance your housing loan, the 'original' plan or housing bonus remains in force.

THE TAX BENEFIT FOR ASECONDOR THIRDRESIDENCEORAN INVESTMENT PROPERTY

Have you taken out a loan for your second dwelling? If so, your second dwelling falls under the federal long-term savings plan. You receive a tax benefit of 30% on the capital amortisation of your loan and on the premiums for your outstanding balance insurance, capped at €2,260 maximum per person. At 30%, you therefore receive a tax benefit of €678. Furthermore, if you rent out your second dwelling, you can also deduct the interest from your property income.

Residence

Maximum deduction

Tax benefit

Belgium

€2,260 (€2,310 for the 2019 fiscal year)

30%.

The maximum tax credit is €678 per taxpayer (€2,260 x 30%).

 

ONLY ONE TAX BASKET

But there is another side to the coin. You only have a tax basket of €2,260 (€2,310 for the 2019 fiscal year). The room in your (federal) tax basket depends on the Region and the applicable tax benefit. Once it is full, e.g. with the housing bonus, the deduction of capital amortisation for your second dwelling will no longer provide you with a tax benefit. In other words: the tax authorities always give priority to regional tax benefits. 

However, the recent changes to the housing bonus have increased the room for manoeuvre slightly. The Flemish integrated housing bonus (loans as of 1/1/2016) may be combined with federal long-term savings. The amount of the integrated housing bonus therefore does not have to be deducted to determine the room in the long-term savings tax basket. In Brussels, there is still room for loans as of 2017, and in Wallonia, for loans as of 2016.

For older loans, there is practically no room left. Once the regional tax basket has been filled with loan costs related to your family home, you can no longer receive the federal tax benefit. In concrete terms, a second dwelling will provide you with a tax benefit above all if your first dwelling has been repaid in full. However, you may still deduct the interest from your property income (rental).

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