Out goes mortgage relief, in come lower purchasing taxes

The new Flemish government has announced a big shake up for home buyers. Mortgage relief is being phased out for your only home in Flanders, a Flemish field of competence.  In return the tax you have to pay when you purchase a home will be reduced slightly.

Mortgage relief for your only home will no longer be granted to Flemish home buyers who sign the formal purchasing agreement in the presence of a notary after 1 January 2020.  These homebuyers, however will benefit from lower “registration rights”, a tax on home-buying.

For a couple buying a house worth 250,000 euros with a 25 year mortgage this means a loss of 37,000 euros in tax relief. This loss is being compensated by a 1% reduction in the sales tax (down from 7% to 6%).

There had been worries, people who sign the preliminary agreement this year and the formal one next year could lose both advantages. On Saturday Flemish PM Jambon (nationalist) was keen to insist that everybody who buys a house this year will either benefit from mortgage relief or a lower purchase tax after there had been confusion about the plight of home buyers who sign a preliminary agreement this year, while the formal agreement in the presence of a notary is only signed next year.

On Monday Belgian banks made it clear that it’s now practically impossible for anybody to buy a house now and still get Flemish mortgage relief given the time needed to get a notary to supervise your purchase. They say it usually takes three months. Notaries though believe they can just manage taking only six weeks to sort it.