The coefficient of revaluation of cadastral income for 2022
May 2022 – For an entrepreneur, the coefficient of revaluation of the cadastral income (CI) is relevant in two specific situations: when he rents a dwelling to a company, as an individual, and when he rents a dwelling to his own company, as a company director. The revaluation coefficient is recalculated every year.
Revaluation vs. indexation
The CI of buildings is the estimated annual rent of these buildings. Originally - in the 1960s and 1970s - this estimate was used as the basis for calculating income tax. While the tax calculation has evolved since then, the estimate is still based on the standards and prices in effect in 1975. In order to update this estimate somewhat, the legislator introduced in the mid-1980s a kind of indexation: the revaluation coefficient. For 2022, this coefficient amounts to 4,86 compared to 4,63 in 2021.
However, revalorisation should not be confused with indexation. The underlying idea - to update the amount of the CI somewhat - is the same, but the indexation regime is applied in matters of real estate withholding tax and personal income tax, while the revalorization coefficient is only used in the following two situations.
Is your tenant using the building for professional purposes?
If you rent your building to a private individual, you pay taxes on the indexed CI of this building.
If, on the other hand, you rent your building to a company, an ASBL/VZW or a natural person who uses the building for professional purposes, you are liable to pay taxes on the net rent. This net amount corresponds to the rent minus a flat fee of 40%.
However, there is a ceiling on the flat-rate fee. It may not exceed two-thirds of the revalued CI.
Example 1
The rent for a building is 10 000 euros on an annual basis. You can deduct an amount of 4 000 euros (40%) from this rent as expenses. The net rent is therefore 6 000 euros. Let's assume that the IC for this building is 1 000 euros. Let's imagine that the RC of this building is 1 000 euros. The flat-rate costs cannot exceed two thirds of 1 000 x 4,68, i.e. 3 120 euros. The taxable rent is therefore 6 880 euros, instead of 6 000 euros.
Example 2
The CI of the above-mentioned building is not 1 000 euros, but 1 500 euros. In this case, the maximum lump sum for costs is 4 860 euros (i.e. two thirds of 1 500 euros x 4,68). Since this maximum amount is higher than the actual flat rate of 40% of the rent, you will (only) be taxed on 6 000 euros.
Do you rent the property to your own company?
The revaluation coefficient is also used when a company director rents a property to the company in which he/she is a director. This rule aims at fighting against abuses. Indeed, thanks to the 40% flat fee, it was sometimes more interesting to receive a rent than a remuneration. The rent that the company director receives from his company is however reclassified as professional income in application of an anti-abuse provision. This revaluation will be carried out if and insofar as the rent exceeds five thirds of the revalued cadastral income.
Example 3
The company director receives 10 000 euros in rent for a house with a CI of 1 000 euros.
The reclassification of the rent as professional income concerns the part of the rent that exceeds 7 800 euros (5/3 of 1 000 euros x 4,68).
In this example, the company director will therefore receive 7 800 euros in rent, from which he can deduct 40% of rental expenses, and 2 200 euros in professional income, which will be added to his other professional income.
