Outlook on new rules and changes in the real estate sector
With 2024 just around the corner, we are not only entering a new year but also facing several important changes in the real estate sector. Below is an overview of the key developments that the coming year will bring.
Temporary VAT reduction to 6% for demolition and reconstruction of a home
There has been considerable media attention regarding the 6% VAT rate for the demolition and reconstruction of buildings. As of 1 January 2024, this measure will no longer apply to new construction projects for which no planning or environmental permit application was submitted before 1 July 2023.
Private individuals who purchase an old property, demolish it and construct a new home may still benefit from the reduced rate, provided certain conditions are met. The property must be the buyer’s or developer’s sole and primary residence for a period of five years, and the habitable surface area may not exceed 200 m².
Stricter requirements for the Energy Performance Certificate (EPC) of common areas
From 1 January 2024 onwards, apartment buildings in Flanders must always have a valid Energy Performance Certificate (EPC) for the common areas. This certificate must be permanently available, not only in the event of a sale.
If the certificate is missing, fines of up to €5,000 may be imposed. This obligation applies regardless of whether the building is sold or rented out. Newly built apartment buildings are the only exception: in these cases, the EPC for the common areas must be obtained no later than one year and one month after the urban planning or environmental permit has been granted.
Abolition of the transferability of registration duties
As of 1 January 2024, the possibility to transfer registration duties will be abolished. In the past, buyers could benefit from this under specific conditions, but this transitional regime will now come to an end.
The new, lower registration duty rates will apply automatically. The preferential rate for a sole and primary residence will be set at 3%, while a rate of 1% will apply to a sole residence subject to a commitment to carry out major renovations. For the purchase of a second home, an investment property or building land, the registration duty remains at 12%.
Abolition of the federal housing bonus
Following the abolition of the Flemish housing bonus, the federal housing bonus will also be discontinued as of 1 January 2024. This means that mortgage loans for second homes or investment properties can no longer be declared in personal income tax under the long-term savings scheme.
For investors who already benefited from the bonus, nothing changes and existing advantages remain in place. In other words, investors who made investments in recent years will continue to enjoy a tax benefit of 30% on the eligible amount for the duration of the mortgage loan. This results in an annual tax advantage of up to €705 and also leads to a reduction in municipal taxes.