New reductions in stamp duty for home buyers
March 23, 2023
5 minutes to read
Good news for first time home buyers. Stamp duty will soon be cut significantly in the Walloon Region and Brussels-Capital Region of Belgium. This is another windfall after the recent cut in notary charges came into effect nationwide.
Lower notary charges throughout Belgium
If you are taking out a mortgage loan to buy a home since the start of 2023, your notary charges will be less in most cases. Notary charges include fees, deed charges and third-party expenses (such as fees for property searches such as the environmental search report). These lower rates are in effect in all regions of Belgium. For instance, if you take out a 150,000 euro mortgage loan to buy a 250,000 euro home, your notary charges will be around 1,200 euros (including 21% VAT) less than before: 5,270 euros instead of 6,470 euros. For homes between 350,000 and 850,000 euros, the reduction gradually decreases. For homes costing 850,000 euros or more, the notary charges are now higher than in the past.
Do bear in mind that you will only receive this reduction if you are buying the home as a private individual and it is the only residential property you own. It does not cover properties purchased by companies. If you own other properties or building plots, you will also not receive this reduction.
Less stamp duty in Wallonia
In the Walloon Region, you pay 12.5% in stamp duty on the purchase price of an existing home. New builds are subject to VAT but not subject to any stamp duty. Stamp duty is a tax the government charges when you register a deed of sale. 12.5% is of course a significant cost, particularly for first time home buyers.
Fortunately, the government understands this and therefore offers a stamp duty reduction to private individuals who are buying their only home. In the Walloon Region, the first 20,000 euros of the purchase price is exempt from stamp duty. Let's say you are buying a home in Wallonia for 300,000 euros. In that case, you will only pay 12.5% in stamp duty on 280,000 euros. You don't pay any stamp duty on the first 20,000 euros, which means you get a 2,500 euro reduction (12.5% of the exempted 20,000 euros is 2,500 euros). So what is changing? In 2023, the band exempt from stamp duty is being raised from 20,000 euros to 40,000 euros. This could double your final stamp duty reduction to 5,000 euros. Do bear in mind that this does not automatically mean you will always receive a 5,000 euro reduction rather than a 2,500 euro reduction. The amount of the exemption will depend on the property's purchase price:
If the purchase price is less than 350,000 euros, you will save 5,000 euros in stamp duty, which is twice as much as before.
If the purchase price is between 350,000 and 500,000 euros, your stamp duty reduction will be between 2,500 euros and 5,000 euros. The calculation is made according to the following formula: 40,000 - ((20,000 x (purchase price - 350,000))/(500,000 - 350,000))
If the purchase price is more than 500,000 euros, nothing changes. Your stamp duty reduction will still be 2,500 euros.
You will only receive the reduction if you officially move into the property within 3 years of purchase. This arrangement is scheduled to come into effect in the summer of 2023, although the Walloon government still needs to give it the final green light. If you are buying a building plot or buying off-plan and you are charged stamp duty on the land, an exemption also applies. That exemption is also going up (expected in the summer of 2023).
If the purchase price of the building plot is less than 175,000 euros, you will save 5,000 euros in stamp duty. That is twice as much as before.
If the purchase price of the plot is between 175,000 and 250,000 euros, you will save between 2,500 and 5,000 euros in stamp duty. The calculation is made according to the following formula: 40,000 - ((20,000 x (purchase price - 175,000))/(250,000 - 175,000))
If the purchase price of the plot is more than 250,000 euros, nothing changes. Your stamp duty reduction will still be 2,500 euros.
Do bear in mind that you will only receive this reduction if you officially move into the new build home within 5 years of the purchase, you are making the purchase as a private individual and the home is the only residential property you own.
Reduced stamp duty in the Brussels-Capital Region
If you are buying a home in Brussels, you can look forward to some very interesting tax reductions from April 2023.
In Wallonia buyers don't pay any stamp duty on the first 20,000 euros, but in the Brussels-Capital Region the first 175,000 euros are exempt from stamp duty (for homes up to 500,000 euros). Let's say you are buying an existing home worth 300,000 euros in the Brussels-Capital Region. In that case, you will only pay 12.5% in stamp duty on 125,000 euros. You don't pay any stamp duty on the first 175,000 euros, which means you get a reduction of 21,875 euros (12.5% of the exempted 175,000 euros is 21,875 euros). These rules will now improve even more from April 2023:
The exemption will apply to the first 200,000 euros rather than the first 175,000 euros.This will push up your reduction from 21,875 euros to 25,000 euros.
This exemption applies to homes up to 600,000 euros (rather than up to 500,000 euros as was previously the case).
You do have to officially move into your home within 3 years of purchase. Previously this was 2 years. And you have to stay resident in the home for at least 5 years continuously.
If you also commit to energy-saving home renovations, you can get an even greater reduction. That is because the 200,000 euro limit will go up if you improve the energy efficiency rating of your home by at least 2 band levels within 5 years. The limit will increase by 25,000 euros for every energy efficiency level your property goes up. Let's illustrate this with an example. You buy a home with an energy efficiency rating E. After your renovations, the home has an energy efficiency rating B. The property has therefore gone up 3 levels. This means that the first 200,000 euros plus 75,000 euros of your purchase price are exempt from stamp duty. You therefore do not pay the 12.5% stamp duty on the first 275,000 euros. This results in a total reduction of 34,375 euros.
Stamp duty in Flanders already reduced in 2022
In the Flemish Region, stamp duty on residential properties purchased by private individuals already changed in 2022. Since last year, private individuals buying their only residential property (no new builds) in Flanders pay 3% in stamp duty. Previously, this was 6%. If you renovate or demolish and rebuild the property to make it significantly more energy efficient, you only pay 1% in stamp duty on the purchase price. This used to be 5%. The stamp duty on the purchase of modest homes has also been cut. More background information on reduced stamp duty Flanders