Property registration fees: What will change in 2022?
What are property registration fees?
When you buy a home, you must pay the property registration fees in addition to the purchase price. This is a tax collected by the tax authorities to register the deed of sale for the property. You pay the registration fees for your home to the notary, who then transfers the amount to the tax authorities. This system has worked this way for years, but changes are coming. The 2022 registration fees will look significantly different because the Flemish government wants to make it easier to buy a first home.
The situation before
The amount of registration fees you paid before 2022 depended on your situation. A distinction is made between individuals purchasing a single-family home and those purchasing a home with the intention of carrying out major energy-efficiency renovations or demolishing and rebuilding the property. These were the previous registration fees for residential properties:
First home: 6% registration tax
Major energy-efficiency renovation or demolition and reconstruction: 5% registration tax
Reduction of rights
Paying registration fees for your home isn’t easy for every buyer. That is why the government has introduced a registration fee reduction. This scheme ensures that people enjoy a tax benefit when they purchase a so-called modest home. These are homes with a value of up to €200,000 or up to €220,000 in major cities and municipalities in the Flemish Periphery. For family homes within this price range, you received a €5,600 discount on the property’s registration fees. For energy-efficient renovations or demolition and reconstruction, the discount was €4,800.
New regulations effective January 1, 2022
Starting in January 2022, reduced registration fees will apply to first-time homebuyers. A distinction will still be made between rates for family homes and homes that have undergone major energy-efficiency renovations or have been demolished and rebuilt. The new registration fees for homes are as follows:
First home: 3% registration tax
Major energy-efficiency renovation or demolition and reconstruction: 1% registration fee
New rules on reduction of rights
The rules regarding stamp duty relief will also change in 2022. More homes will be eligible for stamp duty relief, as the threshold will be raised to a property value of up to €220,000, or up to €240,000 in major cities and municipalities in the Flemish Periphery. However, the amount of stamp duty relief received will decrease. For a single-family home, you will receive a €2,800 reduction in transfer taxes, and for a major energy-efficient renovation or demolition and reconstruction, you will receive a €960 reduction in transfer taxes.
Changes to the rules on the transferability of registration fees
The transferability of registration fees means that you can offset the registration fees for your previous home against those for your new home. This provision will be phased out and will no longer be available as of January 2024. You can still make use of the scheme during the interim period, but under special conditions. If you choose to use the new rate (3% or 1%) for residential registration fees, the portability of registration fees will no longer apply. If you still wish to take advantage of the transferability of registration fees, you may opt for the old rate (6% or 5%) for residential property registration fees.
There are, however, two snags:
The deed for the first home must be executed before January 1, 2022.
The deed for the new home must be drawn up no later than December 31, 2023.
What about a second or third home?
The rules regarding property transfer taxes have changed to make buying a first home more attractive. At the same time, buyers purchasing a second or third home will pay more in taxes. These new regulations are intended to address inequality in the housing market. The registration fee rate for your home has always been higher for a second home. Previously, you paid 10% on top of the purchase price. This percentage will increase to 12% in 2022. An exception applies to the purchase of agricultural land or nature reserves. For these parcels of land, the 10% rate remains in effect.
When will the new rates take effect?
The new legislation regarding property registration fees will take effect on January 1, 2022. The rate you pay depends on the date of the purchase agreement and the date of the notarial deed.
For your first home, the notarial deed is the determining factor. So, if you signed the purchase agreement in 2021 but the notarial deed wasn’t finalized until 2022, you are eligible for the lower property registration fees and will pay only 3% or 1% in tax.
For a second home, the purchase agreement takes precedence. Therefore, for a purchase agreement dated 2021, you will pay the lower rate of 10%, even if the notarial deed is not signed until 2022.
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