Federal government reaches agreement on reduced VAT rate for demolition and reconstruction of rental properties
Federal government reaches agreement on reduced VAT rate for demolition and reconstruction of rental properties
May 2024 - On 20 March 2024, the federal government approved the reduced VAT rate of 6% for demolition and reconstruction projects followed by the construction of rental housing. This reduced rate (6% instead of 21%) already applies to private individuals who demolish and rebuild their homes.
With this measure, the government is responding to calls on the rental market, which is also struggling with a shortage of affordable housing. Finance Minister Vincent Van Peteghem does attach some conditions to this reduced rate:
· the habitable area must not exceed 200 square metres
· the occupants (in this case tenants) must be domiciled there (second homes and holiday homes are therefore excluded)
· the property must be let for at least 15 years (but not necessarily by the same tenant). The property may therefore not be sold.
Remarkable: the reduced VAT rate for landlords will not only be reintroduced, but even extended. Indeed, the preferential rate will no longer be limited to 32 Belgian cities (in the fight against slumming), but will apply to the entire Belgian territory. The new scheme thus parallels the single, limited preferential rate retained by the federal government for private individuals last year.