Following the recent tax reform announcements in the Brussels Capital Region and Walloon Region, the Flemish Government has recently also announced a reform on the ‘tax reduction for mortgage loans concluded for the sole and own dwelling’.
The changes envisaged will apply to mortgage loans concluded as of 2016. The condition of ‘sole’ dwelling will be abolished. Consequently, taxpayers who contract a loan for their own dwelling, but who already own another house or flat, will be able to benefit from a tax reduction. However, the tax benefit will be lower compared to the case of taxpayers who conclude a loan for purchasing or building their first property. In fact, the tax reduction will apply to every house or flat that can be classified as a taxpayer’s ‘own dwelling’, regardless of the number of properties that he or she owns.
The (maximum) amounts that qualify for the mortgage loan tax relief will remain the same as the thresholds set forward for mortgage loans concluded in 2015, notably EUR 1.520 (base) + EUR 760 (increase during the first 10 taxable periods) + EUR 80 (during the first 10 taxable periods if there are 3 or more dependent children on 1 January of the year following the year of the loan). As in the past, the increased amounts of EUR 760 and EUR 80 in principle will not be available for taxpayers who are or become owner of other properties (i.e. houses and/or flats). The percentage of tax relief also remains 40% (calculated on the above qualifying amounts).
Following the above, the Flemish tax relief for long-term savings (capital repayments) and Flemish tax relief for ‘ordinary interest’ paid for the own dwelling will be abolished for loans concluded as of 2016.
For loans concluded before 2016, the current tax relief will continue to exist. Consequently, it is anticipated that three differentiating tax systems for the ‘housing bonus’ (‘woonbonus’/’bonus-logement’) will co-exist in the Flemish Region, notably: (1) the ‘old’ system for loans entered into between 1 January 2005 up to and including 31 December 2014, (2) the ‘first generation’ regional system for loans concluded as of 1 January 2015 and finally (3) the ‘second generation’ regional system for loans concluded as from 1 January 2016. A combination of the first generation (i.e. mortgage loans prior to 2016) and second generation (i.e. mortgage loans as of 2016) tax relief for the own dwelling will not be possible.