Explained: What does property tax mean?

What does property tax mean?

Welcome to the new series 'explained'. In this series we examine real estate concepts and explain them to you. This week we provide more information about property tax.

The term property tax refers to a tax levied on real property, such as buildings, land and other real estate properties. It is an annual tax imposed by the municipalities and regions in Belgium.

This tax is calculated based on the cadastral income (KI) of the property. The AI ​​is an estimated value assigned to a property and determined by the land registry administration. The property tax rate varies from municipality to municipality and may also differ between the Flemish, Walloon and Brussels Regions.
Would you like to know more about what AI entails? Then read our page about cadastral income here .

Property owners in Belgium are required to pay annual property tax to the local tax authorities. The proceeds from this tax are used to finance local governments and support services such as schools, road maintenance, and public facilities.

It is important to note that the exact rules and rates regarding property taxes may vary and may change over time, so it is advisable to contact your local tax authority or a tax advisor for the most recent and accurate information about this tax.

Who pays the property tax?

The property tax is paid by the taxpayer. In most cases, the taxpayer is the person who owns the property on January 1.

If a division has been made between the bare owner and the usufructuary, the usufructuary is the taxpayer in that case. But anyone who has the right of building or leasehold is also a taxpayer.

The taxpayer pays the property tax for a period running from January 1 to December 31 (i.e. for the full 12 months)

When a transfer takes place, a division will often be made between the period when the buyer is the owner and when the seller was the owner. The notary will then arrange for a settlement. Because the seller is still the owner or taxpayer on January 1, only he will receive the property tax assessment notice.

How is property tax calculated?

In Belgium, property tax is calculated based on the cadastral income (KI) of a property. The KI is an estimated annual net rental value of the property and is determined by the General Administration of Heritage Documentation (Cadastre).

Here are the steps to calculate property tax in Belgium:

• Determine the Cadastral Income (KI): The KI is determined on the basis of various factors, including the location of the property, the size, the type of building and the state of maintenance. The KI is regularly revised and updated by the land registry administration.

 

• Indexation : The non-indexed AI is indexed annually to determine its current value. The index coefficient is determined by the government and is used to calculate the indexed AI.

 

• Calculate the Tax : The property tax is calculated as a percentage of the indexed CI. The exact percentage may vary depending on the region (Flanders, Wallonia, Brussels) and other factors. For the Flemish Region, the basic rate of 3.97% applies to all real estate. There is a distinction between calculating the provincial surcharges and the municipal surcharges. The provincial and municipal surcharges are multiplied by the basic levy to determine the surcharges for the province and the municipality.

 

• Reductions and Exemptions : There are certain situations in which you are entitled to reductions or exemptions from property taxes. This may be the case for certain renovations, energy-efficient homes or when the property is rented to certain target groups, such as a reduced rate when renting socially.

Some of the reductions are granted automatically. You must apply for other reductions from the Flemish Tax Authorities.

• Payment : The property tax must be paid annually to the competent tax authorities (for example the Flemish Tax Authorities in Flanders

 

It is important to note that rates and rules regarding property tax may differ between the Flemish, Walloon and Brussels regions, so it is advisable to consult the specific regulations of your region for detailed information.

As the owner of a property in Belgium, you usually receive an annual property tax assessment notice with the amounts owed and payment instructions. It is important to pay this tax on time to avoid any penalties and interest charges. If you have any doubts or questions about your property taxes, you can contact your local tax authorities or consult a tax advisor.