Calculation formula for net yield
Gross yield is calculated simply: (annual rent / purchase price) x 100. But this figure is misleading as it ignores all charges. Net yield factors in the actual costs: (annual rent - annual charges) / (purchase price + acquisition costs) x 100.
Acquisition costs in Belgium include registration duties (12.5% in Wallonia and Brussels, 3% in Flanders for the primary residence but 12% for a rental investment) and notary fees (approximately 1.5% of the price). A property purchased for EUR 200,000 with a monthly rent of EUR 900 shows a gross yield of 5.4%, but a net yield often closer to 3-3.5% once all charges are factored in.
Charges to deduct
The main recurring charges are: property tax (variable by municipality, often between EUR 800 and 2,000/year), non-occupant owner insurance, management fees if outsourced, a vacancy provision (typically 5% of annual rent) and a maintenance works provision.
In Belgium, rental income from unfurnished properties is taxed based on the indexed cadastral income increased by 40%, not on actual rental income. This tax system is more advantageous than in neighbouring countries and improves the net after-tax yield for landlords.