Belgians and their real estate abroad

Every year a lot of Belgians go to their second stay abroad during the summer period. We get a lot of questions about this: Does the tax authorities know that I have a second stay abroad? Where should I pay taxes? What must be stated in my personal income tax return? For you, we will briefly sketch an overview of the most important points to consider as the owner of a property abroad to sell house fast San Antonio.

1. Your Belgian personal income tax return

As a Belgian resident, you are obliged to declare your worldwide income in your Belgian personal income tax return. If you own real estate abroad, it is necessary to determine (if applicable) in which country the real estate is taxable, on the basis of the double tax treaty concluded with Belgium.

In most cases, the property is taxable in the country where the property is located. You will thus pay foreign taxes on your property. In Belgium, however, there is still a declaration obligation. You must indicate the gross rental value of this property in codes 1130/2130 of your personal income tax return, but you may (in most cases) deduct foreign taxes from this. This rental value will be stated in your personal income tax return and will then be exempt subject to progression reservation. This means that 60% of the rental value of this property will be taken into account when determining the progressive tax rate applicable to income that is taxable in Belgium. For example, it may happen that you will end up in a higher tax bracket as a result of this.

2. The concept of rental value

In recent years, there has been a great deal of uncertainty about how to determine the rental value of foreign property that is not let.

The concept of rental value can be defined as follows:

“The rental value represents the average annual gross rental which, in the case of rental, could have been obtained during the taxable period, in accordance with land usage and the location of the goods, either in the form of an actual rental charge or of charges borne by the tenant on behalf of and in place of the lessor, or of services and goods supplied by the tenant on behalf of and for the account of the lessor.

In its recent circular of 29 June 2016, the administration provides a response to years of legal uncertainty.

In the new circular, the Belgian tax authorities accept that the rental value of a property located abroad can be determined on the basis of a value established or expressly approved by a foreign authority.

This value may be:

an estimated gross rent for that property which is taken into account there for the establishment of a tax
a flat-rate estimated gross rent which is taken into account there for the establishment of a tax. (e.g. gross rental value determined on the basis of reference parcels, …);
the taxable income for that property which is taken into account in the relevant country for the calculation of an income tax.
This value can be applied by the taxpayer when determining his foreign immovable income, but this is only a possibility and not an obligation. The provisions of this circular are immediately applicable at all stages of the procedure (including any disputes already pending in this respect).

3. Practical (France & Spain): What should I indicate in my Belgian personal income tax return?

Below we give two concrete examples that show exactly what you have to declare in your personal income tax return if you own a property in France or in Spain.

a. You own real estate in France

If you, as a Belgian, own real estate in France, it is now sufficient to use the “valeur locative brute” as the basis for calculating the gross rental value. We refer to a judgment given by the Antwerp Court of Appeal on 2 June 2015 as well as the recent circular of 29 June 2016. The ‘valeur locative brute’ is a flat-rate value set by the French authorities. This value can be found on the following assessment notes:

b. You own real estate in Spain

On the basis of the above circular, we can conclude that the Belgian tax authorities accept that the gross rental value of your Spanish property can be determined according to the Spanish “Valor Cadastrale”. The gross rental value is 2% of the “Valor Cadastral” or 1.1% if the cadastral value has been determined since 1994. Subsequent taxes can also be deducted:

Impuesto sobre bienes immeubles : the municipal land tax, which is determined on the basis of the cadastral value of your property.
Impuesto sobre la renta de los no residentes : the national real estate tax.
This value will have to be indicated in codes 1130/2130 of your Belgian personal income tax return and will then be exempted in your Belgian personal income tax return with progression reservation.