2020 Tax Return: Box III – Real Estate

In box III, you declare the income from any real estate you may own, that can be actual rental income you receive or the theoretical income from a second or third residence.

If you only own the house you live in, you don’t need to declare anything at all, unless you rent out part of your house.

If you have a second residence, you need to declare the cadastral revenue. That figure can be found on the real property tax bill (the précompte immobilier/onroerende voorheffing). If you own it together, you each declare your share (normally 50/50) in your column (code 1106/2106). That cadastral revenue will be multiplied with 1.4 and corrected for inflation. Roughly speaking you will pay tax on 2.45 times the cadastral revenue.

I have a buy-to-let

If you own a rental property, you normally don’t declare the actual rent, just the cadastral revenue, also in code 1106/2106.

If the tenant is a company or someone who uses the property for his profession (e.g. a physician or an accountant), you must declare the rent you receive under code 1109/2109. You pay tax on the rental income minus a deduction of 40% (however, that deduction is limited to 2.87 times the cadastral revenue).

And property abroad?

If you own property abroad, you need to declare that as well (normally in codes 1130/2130) as Belgium will normally have a double tax treaty (list / map) with the other country. If there is no treaty, the codes are 1123/2123.

If you receive rent, you need to declare the rent, but if you don’t (e.g. because it is a second residence), you need to declare the rental value. That is the rent you would receive from a tenant if it were let out. In general, the best thing to do is ask an estate agent to give you a rental value. In 2018, the European Court of Justice has condemned this rule for properties in other EU Member States. Belgium must adapt this rule but there is no political will to do so. Nevertheless, the tax authorities will accept a fixed value, such as the French “valeur locative” (multiply by two and deduct the tax foncière), 2% of the Spanish “valor cadastral” (1.1% if it has been determined after 1993, minus the tax) or 4% of the valuation of real property in the Netherlands.

You cannot take any deductions for expenses, but the tax authorities automatically deduct 40% to cover maintenance and repairs. You can, however, deduct the income tax you paid on the property abroad.

Although you have to declare the rental income or the rental value, that doesn’t mean that you will actually pay tax on that income. The double tax treaty doesn’t let Belgium tax rental income., see cross border taxation. This means that rental income is not taxed but pushes up the tax on other income that is taxable in Belgium.

Your Tax Return :

Marc Quaghebeur

Marc Quaghebeur is a Belgian tax lawyer with Cabinet DAVID specialising in international tax issues and cross border estate planning. He is a member of the Brussels Bar and the Society of Trust and Estate Practitioners.

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Marc Quaghebeur

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