Reform of Flemish registration fees
December 2021 – In its September statement, the Flemish Government announced a significant reduction in registration fees, at least for first-time home buyers. However, this rate reduction is offset by an increase in registration fees due in other situations.
Rate reduction
From 1 January 2022 onwards, if you buy your own freehold home in the Flemish Region, you will only have to pay 3% (instead of the current 6%) in registration duty. The application of registration duties on the transfer of a property is a matter for the region in which it is located. Therefore, residents of other regions or even other countries who can prove that they meet the required conditions can also benefit from this reduced rate.
The first condition is that it must be your own, unique home.
If you already own another house or building plot, you can only benefit from the reduced rate if you undertake to sell the other house or plot within a certain period of time after the notarial deed has been drawn up. This period is set at two years. If you do not undertake to carry out this sale, you will be liable for the standard rate. If it subsequently transpires that you have sold the other properties within the period imposed, the reduced rate can still be claimed.
You will also be eligible for the reduced rate for your own and only home in the event of expropriation, provided you can prove that you are buying a new home because the other one has been or will be expropriated.
In addition, it must be a dwelling. In other words, the property must be used to house a family or a person. Building land is therefore excluded.
In addition, you must buy the property in your own name. Therefore, buying via a company is also excluded. On the other hand, owning a property through a company does not prevent the reduced rate from being applied (unless the taxman can show that you have built a building specifically for this purpose).
Finally, you must occupy the property within three years of its acquisition.
If you have applied for the reduced rate and it subsequently transpires that you do not meet the requirements, you will of course be liable for the normal registration fee and a 20% fine.
Better still
If, at the time of purchase, you commit to a thorough energy renovation, you can even benefit from a rate of only 1%. The Flemish Region already applies a favourable rate of 5% for energy renovation.
The conditions for the reduced rate are the same as before: you have five years to obtain a qualifying energy performance certificate and to occupy the house. Please note: this 1% rate is only valid for your own home.
However, there is already a downside to this measure: if you buy a house for less than 200 000 euros (220 000 euros in some cities), you currently receive a reduction of 5 600 euros (or 4 800 euros if you have obtained a reduced rate for energy renovation) in addition to the reduced rate for a single, clean house. From 1 January 2022, these reductions for modest dwellings will be reduced to 2 800 euros and 960 euros respectively, while the ceilings will be increased to 220 000 euros and 240 000 euros respectively.
Rate increase
If you do not personally occupy your own and only home, you will be liable for higher registration fees. From 1 January 2022, the rate will rise from 10% to 12%. This will reduce the pressure of investors on the property market, especially the housing market. Investors will have to pay 9% more tax than those wishing to buy the same property as their own and only home.
Although it is not clear from the information available, the increase in the rate applied to them (12% instead of 10%) would not only affect homes. In other words, companies that buy not a house, but a commercial or logistic building or an office building will have to pay additional taxes of 2%.
Portability
At present, the Flemish Region applies a portability system for registration fees. If you buy a house and later sell it to buy or build a new house, you can deduct the registration fees paid on the first purchase from those due on the second purchase. Previously paid registration fees can even be refunded.
Important limit: the portability of registration fees is limited to 13 000 euros.
However, this advantage will disappear in 2024. You can therefore use it until 31 December 2023.
The reduced rate of 3% or 1% can no longer be combined with portability. Between 1 January 2022 and 31 December 2023, you will have to choose between a rate of 3% (or 1%) without portability and a rate of 6% (or 5%) with portability.
Those who have to pay 12% registration fee (currently 10%) will also be able to benefit from portability, at least until 31 December 2023. This duty will disappear on 1 January 2024.
Building land
If you buy an existing home, you will certainly save money. However, if you buy a building plot to build a house or a new building (with VAT), it will cost you more under the new system. From 1 January 2022, the registration fees payable on building land will also increase from 10% to 12%.
From 1 January 2022
The reduced rates will apply to sales where the deed of sale is executed after 1 January 2022.
If you are planning to buy your first home, you may be tempted to postpone signing the deed until next year. Note, however, that if a compromise has been signed, the contract must be registered within four months. And amending an existing sales contract in order to postpone notarisation until 2022 is considered an offence and may be refused or even penalised by the tax authorities.
However, the higher rates will apply to transfers where the contract of sale - compromis - is concluded on or after 1 January 2022. Therefore, if you want to invest in a second home, there is no point in rushing to sign the deed. If the agreement was signed in 2021, the 10% rate will still apply.
