The deduction rule for renovation costs
As a private individual, renovation costs are not deductible from rental income. The Belgian tax system applies a flat-rate expense deduction automatically and does not allow deduction of actual expenses. Through a company (SRL), renovation costs are fully deductible as expenses or depreciable over their useful life (typically 10-33 years depending on the type of work).
| Ownership | Deduction of renovation costs | Alternative benefits |
|---|---|---|
| Private individual | Not allowed | Regional grants, 6% VAT |
| Company (SRL) | Fully deductible | Same grants + tax deduction |
Private individual vs company
Private individual: the tax authorities apply a flat-rate deduction automatically. For a private let, there is no expense deduction at all (tax is on CI). For a professional let, the flat-rate is 40% of rent. In neither case can actual renovation costs be deducted.
Company (SRL): all renovation expenses are deductible. Small repairs are immediately deductible as charges. Major works are capitalised and depreciated (e.g. new kitchen over 10 years, roof over 20 years, structural work over 33 years).
EUR 30,000 kitchen renovation. As a private individual: no tax benefit. Through an SRL: EUR 3,000/year depreciation over 10 years, saving EUR 600/year in corporate tax (at 20% rate). Total tax saving: EUR 6,000.
Alternative tax benefits for individuals
While renovation costs are not deductible, individuals can benefit from:
- Reduced VAT (6%) for renovations of properties older than 10 years (instead of 21%)
- Regional renovation grants (RENOLUTION in Brussels, housing grants in Wallonia, Mijn VerbouwPremie in Flanders)
- Property tax reduction for unproductive property during major works (90+ days uninhabitable)
The 6% reduced VAT rate applies only to properties used for housing that are at least 10 years old. New builds and conversions from commercial to residential use are taxed at 21%.
Combine regional grants with the 6% VAT rate for maximum benefit. For energy renovation works, the grants can cover 30 to 70% of the total cost depending on the region and the type of work.
Regional specifics
Brussels-Capital Region
The RENOLUTION programme offers grants for energy renovation (insulation, heating, ventilation). Amounts depend on income category. Brussels also offers grants for facade renovation in certain zones.
Walloon Region
The Walloon housing grants (primes habitation) cover insulation, heating, ventilation and structural works. An energy audit is required for most grants. Amounts are modulated by income.
Flemish Region
Mijn VerbouwPremie covers energy renovation and structural works. The Flemish programme is the most generous for energy-related works. An EPC certificate is required for most applications.
Articles 49 to 53 CIR 92 (business expense deduction), Article 1 Royal Decree 20 VAT (reduced VAT), regional grant legislation — Texts on Justel