Reduced registration fees for demolition and reconstruction starting in 2021

Reduced registration fees for demolition and reconstruction

Anyone who purchases a house, apartment, or building lot must pay transfer taxes on the property. The standard rate for transfer taxes is 10 percent. For those who purchase a house or apartment to live in themselves and do not own any other real estate, the rate is 6 percent.

Since the abolition of the housing bonus on January 1, 2020, the regulations governing transfer taxes have been amended. For example, there is a reduced rate from 6 percent to 5 percent if the buyer carries out major energy-efficiency renovations on the property. The reduced registration fees did not yet apply to the demolition and reconstruction of a home. But that is about to change. Starting January 1, 2021, the Flemish Government will extend this reduced rate to the demolition and reconstruction of homes. They want to encourage this because, in most cases, the buyer can achieve greater environmental benefits this way than through a renovation. The reduced rate will therefore also apply to partial reconstruction.

Change in the deadline for changing domicile

One of the conditions for qualifying for the reduced registration fees on the purchase of a family home is that the buyer must actually establish their residence there within two years. This period begins on the date of the notarized deed. The Flemish Government has determined that this two-year period is too short. If the buyer wishes to carry out renovation work, they must apply for a permit. If the work is then further delayed, there is a risk that the two-year period will be exceeded. And this had serious consequences. For example, the buyer would be liable for the standard sales tax of 10 percent, plus a 20 percent penalty. Therefore, the government has decided to extend the deadline from two to three years, effective June 1, 2020.

Residence Period for Protected Monuments

When purchasing a single-family home that is designated as a historic landmark, you are required to pay only 1 percent registration tax on the purchase price, provided that sufficient investment is made in the property and it is renovated. The buyer has five years to carry out this work, but was previously required to establish residence there within two years. This period is now being extended to five years, so that the buyer has as much time to establish residence as the renovation work takes.

These changes have yet to be finalized, but for now, they are on the table. If any further changes are made, we’ll keep you posted!