Reduced registration fees: a benefit for your home purchase?

The biggest change that will be felt in the housing market this year is undoubtedly the elimination of the housing bonus. That provided a significant annual tax break. The Flemish Government did, however, introduce a (small) subsidy. When purchasing a home

You can now take advantage of the reduced registration fees, which have dropped from 7% to 6%.

The distinction between large (10% registration) and small (5% registration) properties no longer applies. In the summer of 2018, that percentage was set at 7% for all properties. Now it will be 6%.

To qualify for this reduced rate, you must meet certain requirements. For example, you must be registered in the population registry (or the foreign nationals registry) at the address of the purchased house or apartment within two years of the execution of the notarial deed. You are eligible for the 6% rate only if you purchase an existing home; it does not apply to land, apartments, or homes under construction.

Stack discounts

You may be eligible for an additional discount if you purchase a home priced at up to 200,000 euros, or if you purchase a home in one of the major cities of Flanders or in the Flemish Periphery around Brussels for no more than 220,000 euros. That discount amounts to 5,600 euros if you pay 6 percent registration tax on the purchase of your sole, owner-occupied family home. And it amounts to a maximum of 4,800 euros if you pay 5 percent registration tax because, within five years of purchasing the family home, you also carry out an energy-efficient renovation involving the replacement of the heating, cooling, and so on, and insulate at least 75 percent of the building envelope.

These rates apply to all purchase agreements entered into on or after January 1, 2020. The rates of 6 (or 5) percent also apply if you signed the preliminary agreement in 2019 but do not sign the final deed of sale before a notary until 2020. In that case, however, you will no longer be eligible for the housing bonus.

A quick calculation

Bart and Tine from Steenokkerzeel (in the Flemish Periphery municipality near Brussels) are buying a modest home in need of renovation for a purchase price of 190,000 euros. They are exempt from registration fees on the first 80,000 euros. They also benefit from a 5% registration fee rate instead of 6% because they are carrying out a major renovation. On an amount of 110,000 euros x 5% registration fees, the couple pays 5,500 euros in registration fees (instead of 6,600 euros). If their home had previously fallen under the “large property” category, this would have cost them 11,000 euros in registration fees.

Portability remains

The "carryover" provision for registration fees on primary residences also remains in effect. Anyone who sells their home to purchase a new one may, under certain conditions, deduct previously paid registration fees. This carryover amount cannot exceed 12,500 euros and has been adjusted annually to the index since January 1, 2019.

So anyone who sells their home to buy another one will have to pay much less—or perhaps even no—registration fees.

If you have any questions about the calculation of registration fees, please feel free to contact one of our experts.