Registration Duties
The general rule is that registration duties (= current sales taxes) are due on the sale of your building land or house. In Flanders, these registration duties amount to 12% (general) or 3% for the sole owner-occupied home, while in Brussels you will pay 12.5% registration duties.
As an exception, a real estate property can be subject to 21% VAT, namely if this real estate property can still be considered as 'new'. There is also a reduced rate of 1% for substantial energy renovations for the sole owner-occupied home.
When is my house considered as "new"?
A house is considered as new construction until December 31 of the second year after the year in which it was first put into use or acquired. For example, if a house is first put into use in March 2015, it is considered as new construction until December 31, 2017.
Whether a house is considered as 'new' depends on the status of the seller. If the seller is a professional (a so-called professional builder), the sale automatically falls under the VAT system. If the seller is a private individual, they have the choice to sell with sales taxes or with VAT.
When purchasing a 'new' house, 21% VAT must also be paid on the accompanying land, provided that the following three conditions are cumulatively met:
- The building must be sold under the VAT system.
- Both the land and the building must be sold by the same person.
- The land must be transferred simultaneously with the building.
If these three conditions are not met simultaneously, VAT will be paid on the construction and registration duties on the value of the land.
What are the costs when buying building land?
When purchasing undeveloped building land, you pay sales taxes on the price of the land, as it cannot be considered as 'new'. However, you can also combine both! Additionally, there is the option to combine registration duties and VAT. When buying a house off-plan or a turnkey house, you can pay registration duties on the purchase of the land and VAT on the purchase price of the house, provided it is a 'yet to be built' house to which the Breyne Law applies. In such a purchase, you become the direct owner of the land, but only later of the house.
However, if you buy a house that is already under construction, the land and the house are sold simultaneously, and the sale will fall entirely under the VAT system.
As a private individual, it is more advantageous to buy under the registration duties system. In the Flemish region, the registration duties amount to 12% of the price.
Therefore, always consider that besides the purchase price, there are additional costs associated with buying a house.