2024-09-13 04:00:00
While a halving of inheritance tax from 1 January 2028 had already been announced in the Walloon government agreement, the system was supplemented by a halving of real estate donation tax.
Objective: “Maintaining an appeal for this early transfer of assets, which often allows a partial reinvestment in the economy“, explained the Walloon Minister-President and Minister of Finance, Adrien Dolimont.
For Grégory Homans, managing partner of the tax law firm Dekeyser & Associés, the government, which had only addressed the inheritance aspect, is thus remedying an anomaly.This supplement relating to donations was essentialbecause estate planning is established using two vectors: inheritance and donation,” he emphasizes.
Direct online rates, between spouses and legal cohabitants, for real estate donations range from 3% (up to 150,000 euros) to 27% (from 450,000 euros). In three years, the maximum rate of 27% will be reduced to 14%for example. The rates between all other persons (foreigners) today range from 10% (up to 12,500 euros) to 40% (above 1,750,000 euros). Following the reform, the maximum rate of 40% will be reduced to 20%.
Examples
Table of Contents
- 1 Examples
- 2 “There is no longer any need to resort to specialists to organize the transmission, since it can be done at relatively low cost.”
- 3 Multi-owners
- 4 “The Walloon government boasts of having halved the rates, but it is not touching the brackets.”
- 5 No revision of tax brackets!
- 6 Donating property to charity tax deduction
Today, parents of two children can already transfer a property worth 600,000 euros at the very advantageous direct online rate of 3% (up to 150,000 euros per parent and per child).
Will the reduction in property donation taxes therefore have a significant impact, knowing that in Wallonia the average price of a house is much lower than that of the example?
“This striking example concerns a ‘classic’ family! But for a single father who wishes to donate a house worth 500,000 euros to his only son, the benefit of the reform will be very real: he will pay 37,500 euros in registration fees, compared to 60,000 today,” calculated Mr Homans.
“There is no longer any need to resort to specialists to organize the transmission, since it can be done at relatively low cost.”
But this is not the only scenario where the operation will be more advantageous!
It is clear that people with a more tenuous or non-existent family link will clearly benefit. Thus, for example, between “foreigners”, the fact that the maximum rate, which already applies from 175,000 euros, is reduced from 40% to 20% will make a huge difference.
Multi-owners
And let’s get back to our classic family. “The parents, joint owners of three properties (a house, a second home and an investment property) with a total value of 1.5 million euroswant to pass on everything during their lifetime, in one go. From 1 January 2028, they will pay a total registration fee of 92,000 euros, instead of 144,000 euros today. “The reduction in registration fees will considerably simplify planning. No need to resort to specialists to organize the transmissionsince it can be done at relatively low cost,” continues Grégory Homans.
Promoting donations is obviously also a way for the Walloon government to collect taxes directly and clean up the budget more quickly.
“The Walloon government boasts of having halved the rates, but it is not touching the brackets.”
No revision of tax brackets!
This reform has nevertheless a taste of too little and gives the impression that the government has stopped halfway, deplores Gregory Homans. “Inheritance tax has two components: the tax rate and the tax brackets. The government boasts of having reduced the rates by half, but it is not touching the brackets! Inheritance tax is the only tax whose brackets have never been indexed.“We therefore very quickly reach the highest brackets,” underlines the lawyer specializing in planning.
“When we talk about a tax revolution and a fairer tax to give oxygen to the middle classesit would have been necessary to go to the end of the logic, by indexing or revising the tranches“, he concludes.
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The summary
- The Walloon government has announced a reduction in real estate donation taxes from January 1, 2028.
- Real estate donation rates will be divided by twobut the tax brackets remain unchanged.
- These low-cost donations will simplify planning.
- Encourage donations will allow budgetary requirements to be met more quickly.
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Donating property to charity tax deduction
Reform of Property Donation Taxes in Wallonia: A Boost to Early Transfer of Assets
In a recent development, the Walloon government has announced a significant reform to property donation taxes, effective from 2028. This move aims to encourage early transfer of assets, ultimately benefiting the economy. The reform will halve the real estate donation tax, making it more attractive for individuals to pass on their properties to their loved ones.
Objective: Partial Reinvestment in the Economy
According to Adrien Dolimont, the Walloon Minister-President and Minister of Finance, the objective of this reform is to maintain an appeal for early transfer of assets, which often allows for a partial reinvestment in the economy. This move is seen as a positive step towards promoting economic growth and development.
Essential Supplement to Inheritance Aspect
Grégory Homans, Managing Partner of the tax law firm Dekeyser & Associés, emphasizes that estate planning is established using two vectors: inheritance and donation. Therefore, this supplement relating to donations was essential to address the anomaly in the system.
Reduced Registration Fees for Property Donations
The direct online rates for real estate donations between spouses and legal cohabitants currently range from 3% (up to 150,000 euros) to 27% (from 450,000 euros). Following the reform, the maximum rate of 27% will be reduced to 14%. For donations between all other persons (foreigners), the rates range from 10% (up to 12,500 euros) to 40% (above 1,750,000 euros), which will be reduced to 20% post-reform.
Examples of Benefits
To illustrate the
