Tax Benefits for Real Estate Investors in Belgium

Published on January 17, 2026 and written by Cyril Jarnias

Investing in Belgian Real Estate remains a popular choice, but the subject has become significantly more technical than it was ten years ago. Between tax on rental income</strong, registration duties, reduced VAT on certain projects, special regimes for real estate companies, and green incentives, the Belgian tax landscape still offers genuine levers for optimization – provided you master the rules.

1. Basic Real Estate Taxation: The Playing Field of Benefits

Understanding the basic mechanisms is essential before identifying the real tax advantages.

In Belgium, real estate income is taxed either as personal income tax (PIT) for individuals, or as corporate tax (CT) for companies. In both cases, the starting point is the cadastral income.

The cadastral income (CI) corresponds to a theoretical rental value calculated based on prices from the 1970s. It is indexed each year, and for rentals for private use, it is this indexed CI, increased by 40%, that serves as the taxable base, not the actual rents received.

1.1. Rental for Private Use: A Very Advantageous Regime

When you rent a property to a private individual who uses it exclusively as a private dwelling, the tax authorities do not look at your actual rents. The taxable base is the indexed cadastral income x 1.4, regardless of your actual receipts.

For 2025, the indexation coefficient is 2.2446. Let’s take a simplified example.

Data	Indicative Value
Non-indexed cadastral income	€900
Indexation coefficient (2025)	2.2446
Indexed CI	€2,020.14
40% increase (x 1.4)	€2,828.20

It is this amount (approximately €2,828 in the example) that is added to your other income and taxed at progressive rates (25% to 50%, plus a municipal supplement of 7%). In practice, the effective tax burden on your actual rents is often much lower than what a tax on rents received would produce.

1.2. Rental for Professional Use: Advantage… to Handle with Caution

As soon as the tenant uses the property for a professional activity (offices, commerce, liberal profession), the rule changes: the taxable base is no longer the CI, but the actual rent. However, the tax authorities apply a flat-rate deduction of 40% for expenses, capped at two-thirds of the revalued CI.

The mechanism can be summarized as follows:

Situation	Main Taxable Base	Key Advantage / Disadvantage
Rental for private use	Indexed CI x 1.4	Tax on a flat-rate basis, often very low
Rental for professional use	Gross rent – 40% (capped)	Higher taxable base, but flat-rate deduction

This 40% deduction implicitly recognizes a series of costs (maintenance, repairs, management), but the taxation remains significantly heavier than for a purely private rental. Result: many investors favor rental for residential use, or ensure that professional use remains marginal in the lease.

1.3. Furnished Rentals and Additional Services: Combining Multiple Regimes

For a classic residential furnished rental (excluding tourism), the tax advantage is still manageable.

– a “property” portion (subject to the regime described above: indexed CI x 1.4 for private use);

– a “furniture” portion (furniture income).

By default, if nothing is specified in the lease, the administration considers that 40% of the rent remunerates the furniture. On this movable portion, the landlord benefits from a 50% flat-rate expense deduction and the balance is subject to a 30% withholding tax. The overall effect is a real rate of about 15% on this portion of the rent.

Summary table:

Element	Tax Rule
Property portion (private use)	Taxation on indexed CI x 1.4
Furniture portion (by default 40%)	50% flat-rate expenses, 30% on the remainder
Effective rate on furniture portion	Approx. 15%

Adding paid services (cleaning, breakfast, etc.) creates miscellaneous income taxed at 33%. When the activity becomes regular and organized (e.g., intensive tourist rental), the administration may reclassify the activity as a liberal profession or business, with social security contributions and VAT to follow.

For a patrimonial investor seeking stable net yield, long-term rental, even furnished, therefore remains fiscally more predictable than the pure “tourist” or Airbnb-type model.

2. Registration Duties: Regional Levers for the Investor

When purchasing real estate, the main immediate tax cost remains the registration duty, which varies by region, the nature of the property, and its intended use.

2.1. General Rates and Reduced Rates by Region

The Regions have significant room for maneuver, with very different regimes depending on whether it is a primary residence or an investment.

Region	Primary Residence (base rate)	Investment / 2nd Property (rate)	Major Specifics
Flanders	3%, then announced 2%	12%	Reductions for “modest dwellings”, specific rates for energy renovation purchase, etc.
Wallonia	12.5%, but planned shift to 3% for sole residence	12.5%	Major reform with elimination of the former housing check and reductions on “modest houses”
Brussels	12.5% with significant exemption on the first €200,000 for own residence	12.5%	Conditional exemption, possible supplement for energy renovation

For a pure investor (second home, rental property, income-producing building), the “social” or heavily reduced rates are rarely applicable. The standard regime (12% or 12.5%) remains the norm, especially in Wallonia and Brussels.

2.2. Specific Regimes for Professional Buyers

Some more advantageous regimes exist for professional buyers, active in buy-sell. Subject to conditions (number of units bought and sold within a certain timeframe), the duties can be reduced to:

Region	Reduced Rate for Professionals
Flanders	4%
Wallonia	5%
Brussels	8%

These regimes clearly target operators who buy to resell after works. They represent a significant advantage for structured property dealers, much less so for the individual investor.

2.3. Partial Refund in Case of Quick Resale

Another little-known but interesting mechanism for some opportunistic investors: the partial refund of registration duties in case of a quick resale.

Region	Percentage of Refund	Remarks
Brussels	36% of duties paid
Flanders	60% of duties paid	Only if the initial duty was 12%
Wallonia	60% of duties paid

This mechanism softens the cost of short-term operations, but remains delicate: the investor still bears a significant entry cost and depends on market liquidity to exit on time.

3. VAT: A Powerful Advantage for New Build and Renovation Projects

Beyond registration duties, VAT today offers the most spectacular tools for optimizing a real estate structure, especially since the establishment of a permanent 6% regime for demolition-reconstruction for rental purposes.

3.1. 6% VAT for Demolition + Reconstruction for Rental Purposes

Since July 2025, Belgium has made permanent a very attractive system: the sale or works of demolition-reconstruction of a new dwelling intended for rental can benefit from a VAT rate of 6% instead of 21%, under strict conditions.

Two main scenarios:

– Works commissioned by the investor (demolition/reconstruction);

– Sale by a developer to an investor of a rebuilt dwelling.

In both cases, the investor must commit to a long-term residential use (15 years):

– either for social rental via an approved agency or a public body;

– or for private long-term rental to natural persons who immediately establish their official residence there.

This commitment is framed by prior declarations to the SPF Finances (forms 111/2, 111/3 or 111/5) and documented by registered leases.

Type of Situation	VAT Rate on Construction	Main Condition
Demolition-reconstruction for resale or own use (outside the regime)	21%	No specific rental commitment
Demolition-reconstruction for social rental (investor)	6%	Social rental 15 years, no limit on habitable surface
Demolition-reconstruction for private long-term rental	6%	Residential rental 15 years, max habitable surface (175 m² on sale, 200 m² for works)

The financial impact is major: on €300,000 of works, the difference between 21% and 6% represents €45,000 in VAT savings. For a long-term investor, this is an advantage that can tip a project’s profitability.

3.2. Conditions to Respect: Beware of Pitfalls

This regime is not an unconditional gift. The conditions are numerous:

– obligation of effective rental for 15 years to resident individuals or a social operator;

– prohibition of non-residential use (no student housing, no tourist rental, no holiday let);

– cap on habitable surface (175 m² on purchase, 200 m² for works) for classic private rental;

– mandatory prior declarations via MyMinfin within precise deadlines;

– impossibility in principle to regularize afterwards if the declaration arrives after the VAT has become due.

In case of non-compliance (change of use, sale too quickly without the buyer taking over the commitments, etc.), the administration may claim the VAT difference with interest: the advantage obtained is then retroactively challenged.

3.3. 6% VAT on Renovation of Existing Dwellings

Alongside this demolition-reconstruction regime, investors also benefit from a 6% rate on renovation works for dwellings over 10 or 15 years old (depending on the nature of the works), provided that:

– the building is primarily used for housing;

– the contractor charges VAT at 6% for works on the residential part.

3.4. VAT – Registration Duties Interaction

A key principle in Belgium: on the same property, you do not pay both VAT and registration duties on the same component.

– the land is generally subject to registration duties (12% or 12.5%);

– the new building (or assimilated) is subject to VAT (21% or 6% depending on regimes).

When the same seller transfers land + new construction, VAT may apply to the whole. Each structure must therefore be analyzed case by case to arbitrate between VAT and registration duties.

4. Investing via a Company: Depreciation, Interest, NID and B‑REITs

For significant portfolios or repeated operations, investment via a Belgian company remains a powerful tool, even though the corporate tax is now set at 25%.

4.1. Structural Advantages of the Real Estate Company

Belgian companies (BV/SRL, SA/NV) that hold real estate benefit from several structuring tax advantages:

– Depreciation of buildings: the value of the building (but not the land) is depreciable, typically at 3% per year for a commercial building, 5% for an industrial building. This depreciation reduces taxable profit.

– Deductibility of expenses: repair, maintenance, renovation costs, property taxes, transfer costs (registration duties, mortgage duties) are deductible expenses.

– Deductibility of interest: interest on acquisition financing is in principle deductible, subject to thin capitalization rules (EBITDA limit).

– Loss carryforward: tax losses can be carried forward indefinitely, with annual use limited (€1M + 70% of the base beyond that).

Synthetic table:

Element	Tax Treatment in a Company
Building depreciation	Deductible (usual rates 3% / 5%)
Land	Not depreciable
Financing interest	Deductible (within EBITDA limits)
Property tax, registration duties, mortgage duties	Deductible as expenses
Corporate tax	25% (20% on the first €100,000 for small companies)

For a heavily indebted investor, the combination of interest + depreciation can significantly compress taxable profit, resulting in an effective tax rate well below 25%.

4.2. Notional Interest Deduction: The Deduction for Risk Capital

Belgium created a specific mechanism to encourage companies to finance themselves with equity rather than debt: the deduction for risk capital, better known as the Notional Interest Deduction (NID).

Key characteristics:

The NID rate is linked to the yield on Belgian 10-year government bonds. SMEs benefit from a preferential rate of +0.5%. The deduction is capped by a “basket” mechanism shared with other deductions. Finally, the NID cannot create or increase a loss, but unused amounts can be carried forward within certain limits.

Mechanisms of the New Investment Deduction (NID)

For a highly capitalized company holding real estate, the NID can significantly lower the effective CT rate, sometimes close to 0% in very capital-intensive structures.

4.3. B‑REIT (Regulated Real Estate Company): Quasi-Exemption from CT

For institutional investors or individuals via the Stock Exchange, Belgium has a very particular regime: B‑REITs, officially “Regulated Real Estate Companies” (RREC).

Main characteristics:

– legal form: listed SA/NV, minimum capital €1.2M;

– main activity: active management of a real estate portfolio;

– debt limited to 65% of assets, interest limited to 80% of income;

– portfolio valuation at fair value, without depreciation of buildings;

– imposed diversification (max 20% of the portfolio in a single complex).

From a tax perspective, the B‑REIT is quasi exempt from corporate tax on its real estate activities. The profit is mainly taxed at the shareholder level at the time of dividend distribution, via a withholding tax on movable property.

The regime is therefore particularly attractive:

Level	Main Tax Treatment
B‑REIT itself	Quasi-complete exemption from CT, taxation limited to certain non-admitted expenses
Shareholder natural person	Withholding tax on movable property of 30% in principle; 15% for certain healthcare/housing care REITs (at least 80% of assets in healthcare real estate EEA)

For investors seeking diversified real estate exposure without managing properties themselves, this regime offers very efficient taxation compared to a classic real estate company, especially for specialized B‑REITs in the healthcare sector benefiting from the 15% rate.

4.4. Share Sales vs. Property Sales

Another important advantage of structuring via a company: when selling the shares of a real estate company rather than the property itself:

– the sale of shares is not subject to registration duties, nor VAT;

– for a selling company, capital gains on shares can be exempt from CT if certain conditions are met (durable participation, target company normally taxed, etc.);

– for a selling individual, capital gains on shares are in principle exempt, except for speculation or abnormal management (33% rate).

This differential treatment creates an obvious interest for structures like PropCos (patrimonial company that holds the property). Upon exit, selling the shares of the PropCo can be fiscally much softer than selling the property directly.

5. Real Estate Capital Gains: Surprisingly Lenient Taxation

Compared to the ongoing reform on financial capital gains, the taxation of real estate capital gains in Belgium remains relatively limited for individuals.

5.1. Basic Rules for Individuals

For an individual investor not acting in a professional capacity, the rule is as follows:

Type of Property	Minimum Holding Period for Exemption	Rate if Sold Too Early (excluding municipal supplement)
Primary residence	Always exempt (under occupancy conditions)	–
Other building (built property)	5 years	16.5% if sold within 5 years
Undeveloped land	8 years	33% if sale < 5 years, 16.5% between 5 and 8 years
Inherited property	Generally exempt	–

In short, excluding short-term speculation, an individual who buys an income-producing property to rent it out and sells it after 5 years (built) or 8 years (land) pays no tax on the capital gain for PIT.

The taxable base in case of quick sale is adjusted in favor of the taxpayer:

This mechanism significantly reduces the amount effectively taxable in case of resale within the periods where the capital gain is taxable.

5.2. Long-Term Holding Strategy: The True Belgian Advantage

Combined with the soft regime on private rents (indexed CI rather than actual rents), this system makes the buy‑and‑hold strategy particularly interesting:

– rents taxed on a low flat-rate basis;

– no tax on capital gain if the property is held long enough;

– possibility to reinvest the net capital gain without PIT friction.

For an investor aiming for long-term wealth, this is probably one of the greatest assets of Belgian real estate taxation compared to other European countries where capital gains are systematically taxed.

6. Energy and Renovation-Related Benefits: “Green” as a Tax Lever

The three Belgian Regions have implemented an arsenal of grants, registration duty reductions, and tax deductions to encourage owners – including investors – to improve the energy performance of buildings.

6.1. Reduction of Property Tax for High-Performance Buildings (Flanders)

In Flanders, new constructions that achieve a certain level of energy performance (low E level) can benefit from a reduction of the property tax for 5 years:

Permit Period / E Requirement	50% Reduction	100% Reduction
Permit before 2022	Max E level 30	Max E level 20
Permit from 2022	Max E level 20	Max E level 10

This reduction applies to an important recurring tax and directly improves the net cash flow of new or heavily renovated investments.

6.2. Renovation Obligations and Subsidized Loans (Flanders)

In parallel, Flanders imposes renovation obligations for non-residential buildings and dwellings with a poor EPC score (labels E or F).

For the investor, these constraints have two faces:

For an investor who accepts this logic of heavy renovation, the combined effect of grants, property tax reductions, and lower energy costs for tenants can create a competitive advantage in terms of net rent and property attractiveness.

6.3. Wallonia: Deductions for Professional Green Investments and Reduced Duties

In Wallonia, companies, self-employed individuals, and liberal professions that make energy-saving investments in their professional buildings located in the Region can benefit from an increased tax deduction (thematic):

– 40% deduction for SMEs and self-employed individuals;

– 30% for large companies.

In parallel, starting in 2025, registration duties drop to 3% for the purchase of a sole primary residence, which can be an asset for the investor who structures part of their wealth as a primary residence (while investing elsewhere via other structures).

6.4. Brussels: Renolution Grants and Green Financing

The Brussels Region has set up a system of “Renolution” grants for energy renovation, together with:

– enhanced grants for roof insulation, replacement of heating systems, and installation of heat pumps;

– an ECORENO loan at 0% or 1% to finance works, accessible to owner-occupiers but also, in some cases, to landlords;

– green certificates for energy production via solar panels, even though the support has been reduced.

These mechanisms are not classic tax reductions, but cash grants or financing facilities. For an investor, they can however translate into an increase in the property’s value, better rent, and a reduction in structural costs.

7. Recurring Taxation: Property Tax and Deductible Charges

The property tax (annual land tax) remains an important charge for all owners, but here too, the regime holds some advantages or flexibilities for the informed investor.

7.1. Property Tax: A Charge but also a Deduction

The property tax is calculated from the indexed cadastral income, with:

– a regional base rate (1.25% in Brussels and Wallonia, 3.97% in Flanders);

– provincial and municipal supplements, which push the effective charge to about 30% to 50% of the indexed CI.

7.2. Other Deductible Charges: Turning Tax into a Lever

Whether investing in one’s own name in a professional capacity or via a company, a large number of expenses related to the property can be deducted from the taxable base:

– loan interest (within thin capitalization limits);

– renovation, maintenance, repair costs;

– insurance premiums;

– registration and mortgage duties (in a company);

– notary, architect, expert fees, etc.;

This effect is particularly marked in a company, where the combination recurring charges + depreciation allows smoothing of taxable results over long periods and deferring part of the tax.

8. Perspective and Evolutions: Where Do the Real Advantages Still Hide?

The Belgian tax landscape is in motion, with two strong trends:

1. Tightening on pure finance, notably via the introduction of a general tax on financial capital gains and the end of certain mortgage interest deductions for second homes. 2. Maintaining relatively lenient treatment for real estate held long-term, especially for private residential use.

For the real estate investor, several axes clearly stand out:

The growing complexity of the system, however, implies that each important project deserves tailor-made analysis. But one thing is clear: despite reforms, Belgium continues to offer a rare combination in Europe of moderate taxation of rents, quasi-absence of tax on long-term real estate capital gains, and powerful devices for VAT and green investment. For the patient and well-advised investor, the tax advantages therefore remain very real.