New 2025 Home Renovation Tax Changes: Key Insights for Buyers

Planning to buy and renovate a family home in 2025? Many novelties will have an impact on your project. Initially, it will be a relief to many that the new Flemish government has relaxed the renovation obligation.

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Until now, buyers of an energy-consuming home with an energy performance certificate (EPC) with label E or F are obliged to renovate it within five years to at least a D label. This requirement gradually became stricter, requiring renovation to EPC label A from 2040. The period for carrying out the works will now be increased to six years and the gradual tightening will no longer be possible. Label D therefore remains the target.

On the other hand, renovators will lose a number of financial incentives, although the Flemish Parliament has yet to give the definitive green light for the reforms. An overview of what is planned.

What will change from January 1, 2025?

• The registration tax on the purchase of a family home drops from 3 to 2 percent. The benchmark is the date of the notarial deed of purchase.
• The registration tax on the purchase of a family home that is being extensively renovated or demolished and rebuilt will increase from 1 to 2 percent. The benchmark is the date of the compromise.
• The additional discount for a modest home drops from 2,800 to 1,867 euros. The extra discount of 960 euros for extensive renovations will be scrapped.
• The reduction in property tax will be canceled for permit applications from October 1, 2025.
• The premium percentages for My Renovation Premium are decreasing.
• No more renovation credit with interest subsidy.

Less registration tax for a classic family home…

Anyone who buys an existing house or apartment pays registration tax. The standard rate in Flanders is 12 percent, but there is a reduced rate for those who buy a home to live there themselves and do not own any other homes. From January 1, 2025, this will be increased to 2 percent.

Today the rate for the only owner-occupied home is still 3 percent. When purchasing a house costing 300,000 euros, the reform therefore results in a tax saving of 3,000 euros. The applicable rate depends on the date of the notarial deed. The 2 percent tax applies to authentic deeds executed from January 1, 2025.

2%

Registration tax

From January 1, 2025, the registration tax for the only owner-occupied home will be increased to 2 percent.

Buyers who sign a compromise (private agreement) for the purchase of a house or apartment in the autumn can also benefit from the tax reduction. After the agreement, there is up to four months to sign the deed at the notary. But in practice, few buyers wait until after the New Year. ‘The tax reduction is certainly a bonus, but the interest weighs more heavily. Buyers choose to record the favorable interest conditions that they receive for a loan today,” says notary Bart van Opstal, spokesperson for Notaris.be.

… but more for major energetic renovations

The preferential rate for those who buy a home to undergo major energy renovation or demolition and (partial) reconstruction within five years will disappear. The rate will increase from the current 1 to 2 percent. According to the Flemish Tax Authorities, this affects approximately 1,500 deeds per year, with an average tax base of 370,000 euros. For such an average home, 3,700 euros more registration tax will have to be paid.

The benchmark for these purchases is not the date of the notarial deed, but the date of the sales agreement or compromise. Anyone who signs a sales agreement before New Year can still benefit from the 1 percent rate, even if the notarial deed is signed in 2025.

Buyers who can qualify for the current 1 percent rate for major energy renovations are best at accelerating their purchase.

Christopher Thijs

Director of communications at CIB

‘Buyers who can qualify for the current 1 percent rate can best accelerate their purchase. In terms of timing, there is still room for this, because the date of the compromise is decisive,” says Kristohe Thijs, director of communications at the real estate agents’ federation CIB. ‘Even if you buy before New Year under a suspensive condition, where the condition is only fulfilled after January 1, 2025, the rate of 1 percent can still be applied.’

In line with this, the favorable regime for the donation of buildings that are undergoing major energetic renovation will also be stopped from 1 January 2025. But according to the Flemish Tax Authorities, this scheme was not used.

Conditions remain unchanged

Conditions are attached to the favorable rate for the family home. “They all remain the same,” confirms the office of Finance Minister Ben Weyts (N-VA).

You may not be the full owner of another home or building land. If you do have other real estate, you will still receive the favorable rate if you undertake in the deed of sale to sell the other real estate in a timely manner. This is no later than two years after the date of the authentic deed for a ‘classic’ sole owner-occupied home and three years for a sole owner-occupied home with a commitment to major energy renovation or demolition and reconstruction.

In addition, you must buy a house or apartment that is mainly intended for living there yourself. You must live at the address within three years after the date of the deed. Second homes or investment properties are excluded from the favorable regimes. Furthermore, you must purchase as a private individual. Purchases through a company are excluded. You must purchase full ownership; bare ownership or usufruct alone is not sufficient.

Finally, it must concern the purchase of a home, an asset that will immediately or after normal maintenance or repair work serve as housing for a family. The standard rate of 12 percent registration tax must always be paid on building plots.

1.867

EURO

For a family home with a limited purchase price, there is an additional discount on registration tax of 1,867 euros.

Extra discount for ‘modest’ home adjusted pro rata

If you buy a family home with a limited purchase price, you will receive an additional discount on registration tax. In concrete terms, this concerns a home of less than 220,000 euros. For the core cities and the Flemish Rand around Brussels, the limit is 240,000 euros.

These limit amounts remain applicable, but the discount is reduced pro rata according to the adjusted registration fees. From New Year, this will still be 1,867 euros, compared to 2,800 euros until the end of 2024. The additional reduction of 960 euros for those who buy and undergo major energetic renovations will be scrapped.

No more favorable rates for heritage

The favorable rates for the donation and purchase of protected monuments will be abolished from 1 January 2025. The cabinet of Minister Weyts points out that these favorable regimes were never used in practice.

No discount on property taxes for energy-efficient homes

Anyone who carries out a major energy renovation or (partial) reconstruction after a purchase can receive a discount on property tax, the tax that owners pay annually, for five years.

According to the Flemish Tax Authorities, between 1,000 and 2,000 new reductions were granted per year in recent years. There is a 100 percent discount for a major energetic renovation that results in an E-level of E60 or less (the score indicates how economical a building is, lower is better). For a (partial) reconstruction, a reduction of 50 percent applies if E20 is reached. For a renovation up to a maximum of E10, this advantage increases to 100 percent.

This discount will disappear for all applications for urban development permits from October 1, 2025. Initially, the tax benefit would be deleted for permit applications from January 1, 2025, but the period has been extended. “The government wants to give taxpayers who have recently purchased a home sufficient preparation time to compile and submit a permit application,” says Thijs.

The current arrangement will continue to apply to permits applied for before October 1, 2025, even if property tax will not have to be paid for the first time for a number of years.

My Renovation Premium is decreasing

My Renovation Premium is a premium from the Flemish government for renovation and energy-saving investments. This includes work on windows and doors, walls, floors, the roof, plumbing, electricity and interior renovation.

For premium applications from January 1, 2025, the premium percentages (for owner-occupiers) for the lowest and middle income categories will decrease from a maximum of 50 percent and 35 percent of the invoice amount to 35 percent and 25 percent. “This puts an end to the temporary premium increase from 2022 to the end of 2024 due to the energy and Ukraine crisis,” says Geert Flipts, communications manager of the Flemish Energy and Climate Agency.

Anyone who still wants to benefit from the higher premium must submit their application by December 31, 2024 at the latest, together with a final invoice for the works. “Advance invoices are not eligible,” Flipts notes. The premium for heat pumps, heat pump boilers and solar boilers will be maintained in 2025. More information can be found at mijnverbouwpremie.be.

Furthermore, from 2025 onwards, the EPC label premium must no longer be requested via the grid operator Fluvius, but must be applied for via the Mijn VerbouwPremie counter. The intervention is available if you thoroughly renovate your home with an E or F label in the five years after purchase and the EPC score significantly improves to an A, B or C label. The EPC label premium is linked to income, just like My Renovation Premium. A higher premium is provided if you meet minimum ventilation requirements.

The policy memorandum of Flemish Minister of Energy, Climate and Housing Melissa Depraetere (Vooruit) provides for further adjustment of My Renovation Premium. Wealthy Flemish people will no longer be able to apply for renovation premiums that are lower or perhaps even impossible at all. Families that are not well off will be entitled to a higher premium. That reform would not take effect until 2026.

No more renovation credit with interest subsidy

Anyone who buys a house or apartment with a poor energy performance (label E or F) and energetically renovates that property within five years can also take out a renovation loan from the bank in addition to the mortgage loan for the purchase. The Flemish government provides an interest subsidy for this, but that measure expires at the end of this year. For a purchase from January 1, 2025, there is no longer a renovation loan with interest subsidy.

Big Changes Coming for Flemish Home Buyers in 2025!

Ah, the joys of home renovation! It’s like pulling teeth, but with a paintbrush. So, if you’re planning on purchasing a family home in 2025, buckle up, buttercup! Our beloved Flemish government has chosen this moment to shake things up a bit. Yes, folks, it seems like they’ve finally woken up to the fact that forcing homeowners to renovate within five years can send many a freshly minted homeowner running for the hills!

Is this the sound of relief I hear? Or perhaps just the sound of a thousand DIY YouTube videos playing in unison?

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What Will Change From January 1, 2025?

• The registration tax on the purchase of a family home drops from 3% to 2%. Cheers, right?
• If you’re buying a home to extensively renovate or demolish and rebuild, prepare to pay 2% instead of 1%. Surprise!
• The additional discount for modest homes plummets from €2,800 to €1,867. That’s a fun little haircut.
• No more property tax reduction for permit applications from October 1, 2025. Because why not add a little more confusion?
• There’s a premium decrease in place for the My Renovation Premium. Just as you thought it would get better, eh?
• And yes, no more renovation credit with interest subsidy. Because who doesn’t love higher costs?

Less Registration Tax for the Classic Family Home…

If you’re buying a classic family home, you’ll get to pay a reduced registration tax of 2% instead of the rather eye-watering 12%. A real win, especially if your budget is sticking to your wallet like a clingy ex! If you’re snapping up a house around the €300,000 mark, that’s a sweet saving of €3,000. So don’t dilly-dally, folks!

…But More for Major Energetic Renovations

But wait—there’s a catch! The state seems to think that if you’re fortifying that house of yours with major renovations or a complete demolition, they want their cut up from 1% to 2%. A mere 3,700 euros more in registration tax for your average ambitious fixer-upper. It’s almost like they think renovations could be a potential trap! While they expect to impact about 1,500 deeds a year, let’s be honest: if you’re looking to spend a pretty penny on the energy-efficient makeover, that tax hike is like a slap in the face with a cold, soggy towel.

Buyers, Take Note!

Folks, if you’re eyeing that 1% rate, it’s time to move! Try to seal the deal before New Year’s Eve rolls around! Make it a resolution for 2025, but, you know, the 2024 version. Because when it comes to taxes, procrastination is NOT your ally.

No More Discounts for Heritage and Property Taxes

Wait, there’s more! Any favorable rates for heritage buildings? Gone. Discounts for energy-efficient homes? Out the window. All these reforms seem to flicker like the hope of a cheaper renovation dream.

My Renovation Premium: A Distant Memory

The My Renovation Premium might sound great, but it’s about to take a step back. From January 1, 2025, if you meet certain income levels, you’ll get a premium up to just 35% for lower and middle income categories. Instead of playing Santa Claus with renovations, the Flemish government will now be a bit more Scrooge-like. No more generous portions; they’ve clearly decided to tighten their belts.

Conclusion: Time to Adapt!

So, folks, whether you’re out there hunting for your dream renovation project or just looking to buy a “classic” home in Belgium, get ready for a whirlwind of revised regulations, tax increases, and the possibility of your renovation dreams crashing like a poorly built IKEA bookshelf. Sure, the 2% tax sounds softer than a feather, but the burden of overhead is playing like an old record: it just keeps spinning back to what’s best for government coffers, not yours!

As always, it’s time to contact a notary, dive deep into these changes, and strategize like you’re planning the next big Hollywood blockbuster. Here’s hoping your renovations end with sparkling crystal chandeliers and not that spirit-crushing stress of 2% extra you weren’t prepared for!

Are you considering buying and renovating a family home in 2025? If so, you’ll be pleased to know that several significant changes are on the horizon, especially as the newly minted Flemish government eases the previous stringent renovation obligations, providing a sigh of relief for many prospective homeowners.

On Saturday, November 16th, Finance Avenue will unfold as the prominent financial event hosted by De Tijd, L’Echo, and De Belegger, catering to both seasoned investors and those new to the world of finance. Participants will receive actionable tips not only for investing in shares, trackers, funds, and real estate but also invaluable guidance on navigating pension strategies and succession planning.

The prior requirement dictated that buyers of homes deemed energy-consuming—specifically those with an energy performance certificate (EPC) rated E or F—must complete renovations within five years to elevate the rating to a minimum of D. While this obligation was set to tighten progressively towards achieving an EPC label A by 2040, the government has now extended the renovation window to six years and eliminated the phased tightening. Therefore, homeowners now only need to aim for label D.

While these changes may signal relief for many, renovators will no longer benefit from several financial incentives—pending final confirmation from the Flemish Parliament regarding these reforms. Below is a detailed overview of the upcoming changes.

What will change from January 1, 2025?

• The registration tax on purchasing a family home will be reduced from 3 percent to 2 percent, with the effective date being the execution of the notarial deed.
• The registration tax for those purchasing a family home intended for extensive renovation or demolition followed by reconstruction will rise from 1 percent to 2 percent; the pivotal date will be when the compromise is signed.
• The additional discount for buying a modest home will decrease from 2,800 to 1,867 euros. Additionally, the previous discount of 960 euros for extensive renovations will be eliminated.
• The exemption on property tax will no longer apply to permit applications submitted after October 1, 2025.
• The percentages associated with My Renovation Premium will see a decline.
• There will be no more renovation loans accompanied by interest subsidies.

Less registration tax for a classic family home…

Anyone purchasing an existing house or apartment is subject to registration tax, which currently stands at 12 percent in Flanders. However, as of January 1, 2025, a reduced rate of 2 percent will apply for those buying a home that will be owner-occupied, provided no other property is owned. This represents a significant tax saving; for a home valued at 300,000 euros, this reform could mean a tax cut of 3,000 euros, based on the date of the notarial deed.

Buyers who enter a compromise for a home in the autumn are also eligible for this tax reduction. It’s crucial to note that after signing an agreement, they have a window of up to four months to finalize the notarial deed. However, many buyers are opting to secure current favorable interest rates rather than waiting, according to notary Bart van Opstal of Notaris.be.

… but more for major energetic renovations

The preferential rate previously available to those purchasing homes for extensive energy renovations will be increased from 1 to 2 percent. According to the Flemish Tax Authorities, this policy impacts roughly 1,500 deeds annually, with an average tax base of around 370,000 euros, leading to an additional 3,700 euros in registration tax for these transactions.

For these types of purchases, the benchmark will not be the date of the notarial deed but rather the date of the sales agreement. Buyers signing a sales agreement before the New Year can still benefit from the 1 percent rate, even if the final deed is signed in 2025.

Buyers who can qualify for the current 1 percent rate for major energy renovations are best at accelerating their purchase.

Christopher Thijs

Director of communications at CIB

According to Christopher Thijs, director of communications at CIB, buyers positioned to seize the 1 percent rate for major renovations should act swiftly. They still have time to secure this benefit as the date of the sales agreement is pivotal. Even transactions made under suspensive conditions that are finalized post-January 1, 2025, can still qualify for the lower tax rate.

Simultaneously, any favorable arrangements regarding the donation of buildings undergoing significant energy renovations will also terminate on January 1, 2025, though usage of this scheme had previously been minimal.

Conditions remain unchanged

All conditions associated with the favorable rates for family homes will continue without alteration, as confirmed by Finance Minister Ben Weyts’ office. As stipulated, the buyer must not fully own another property or plot. If they do own additional real estate, they can still qualify for the favorable rate by committing in the deed of sale to sell the other property within a specified timeframe.

Moreover, the purchased property must primarily serve as the buyer’s residence, with a mandatory move-in requirement within three years post-deed signing. Properties purchased as second homes or for investment purposes are excluded from these benefits. Purchases must occur as individuals, not through corporate entities, and must include full ownership—the bare ownership or usufruct is insufficient.

Extra discount for ‘modest’ home adjusted pro rata

For buyers seeking family homes with a limited purchase price—specifically under 220,000 euros in most areas (240,000 euros in core cities and Brussels’ outskirts)—an additional registration tax discount is applicable. This additional benefit will be adjusted to 1,867 euros beginning January 1, 2025, down from the previous amount of 2,800 euros. The extra deduction for extensive renovations will be eliminated.

No more favorable rates for heritage

Effective January 1, 2025, the previously favorable rates concerning the donation and purchase of protected monuments will be abolished, with government data indicating minimal usage of these schemes historically.

No discount on property taxes for energy-efficient homes

Previously, property owners completing significant energy renovations could receive property tax discounts for five years. However, starting with applications for urban development permits submitted on or after October 1, 2025, this benefit will no longer be available.

Initially, this tax elimination was targeted for January 1, 2025, but the government opted for a longer transition period to allow recent purchasers ample time to submit permit applications. Existing arrangements remain intact for permits applied for prior to October 1, 2025, allowing some homeowners to benefit from temporary tax exemptions.

My Renovation Premium is decreasing

The My Renovation Premium, a financial incentive from the Flemish government designed to support renovation and energy-saving projects, will see a drop in premium percentages applicable to owner-occupied properties starting January 1, 2025. These percentages will fall from 50 percent and 35 percent to 35 percent and 25 percent respectively.

Clients seeking to benefit from the increased premium percentages must submit their applications by December 31, 2024, including final invoices for completed work; advance invoices will not qualify. Premiums for heat pumps and similar installations will remain in effect in 2025, with additional changes anticipated for 2026 under energy policy revisions proposed by Minister Melissa Depraetere.

No more renovation credit with interest subsidy

Currently, buyers of homes rated E or F can access renovation credits supplemented by an interest subsidy from the Flemish government. However, this subsidy program will come to an end after this year, meaning new purchases from January 1, 2025, will no longer have access to renovation loans with this benefit.

How will the loss of discounts⁤ on property ​taxes impact homeowners considering energy-efficient renovations starting in 2025?

Renovations could take advantage of ‍discounts on property taxes. However, starting January 1,⁢ 2025, those discounts will​ no longer be available, further tightening the financial landscape for homeowners investing in energy-efficient upgrades.

What Should You Do?

The message is clear: if you’re contemplating any renovation⁤ projects or seeking to ⁤purchase a family ⁤home ​in 2025, understanding these upcoming regulations is ⁤crucial. The⁣ potential benefits of a lower ‌registration tax for standard⁣ home purchases can be appealing, but coupled with the loss of discounts and increases for energy⁣ renovations, the overall financial picture ⁤may not be as rosy as it‌ appears at ⁢first glance.

It’s imperative to consult a real estate professional⁣ or a notary who can help ⁣you navigate these changes and advise‌ you on the most‍ strategic paths⁤ forward. With the new laws coming into effect,‍ timing your purchase​ or renovation ‍plans could⁢ result in significant financial savings—or, ​conversely, costly oversights if you’re not fully ​informed.

A ​Final‍ Thought

while the reduced tax ‍rates ⁣for family ​homes may seem like a win for buyers, the accompanying loss ‍of incentives and increased costs for renovations could⁤ turn into hidden traps⁤ for⁤ the unwary. As you prepare for 2025, ⁤keep your renovation plans in check and ⁣ensure that you are well aware of the implications these reforms will hold for your property dreams. With proper preparation and awareness, hopefully, you can achieve that​ sparkling renovation you seek without‍ falling prey to unexpected financial burdens.