Can renovation costs be deducted
As a private individual in Belgium, renovation costs are not deductible from rental income. The tax system uses flat-rate expense deductions and does not allow actual expenses. Through a company (SRL), all renovation costs are fully deductible or depreciable. Regional grant programmes partially compensate for individuals.
This is one of the key differences between personal and corporate property ownership in Belgium and a major factor in deciding whether a company structure is worthwhile.
For private individuals
Private individuals cannot deduct any actual expenses from their rental income. The system works as follows:
- Private let: tax is based on the indexed CI, not on actual rent. No expense deduction at all.
- Professional let: the flat-rate deduction of 40% is applied automatically. Actual expenses cannot replace this flat-rate.
Available alternatives: reduced VAT at 6% for renovations of properties older than 10 years, regional grants for energy and structural renovation, and property tax reduction during major works.
While renovation costs are not deductible, they increase the property value and may allow you to charge higher rent. They also improve the EPC score, which is increasingly important for letting in all three regions.
Through a company
A company (SRL) can deduct all renovation costs as professional expenses:
- Minor repairs: immediately deductible in the year incurred
- Major works: capitalised and depreciated over the useful life (10 to 33 years)
- Energy improvements: fully deductible, often with accelerated depreciation
When transferring a property from personal ownership to a company to benefit from the deduction, registration duties of 12-12.5% are triggered on the market value. This cost often outweighs the tax benefit of deductibility.
Regional specifics
Brussels-Capital Region
RENOLUTION grants cover insulation, heating, ventilation and renewable energy installations. The programme targets both owners and tenants, with higher amounts for lower incomes.
Walloon Region
Walloon housing grants cover energy renovation and structural works. An energy audit (PAE) is mandatory for most applications. Cumulation with the 6% VAT is permitted.
Flemish Region
Mijn VerbouwPremie is the main grant programme. It covers insulation, heating, roof renovation and structural works. An EPC label is increasingly required for applications.
Articles 7 to 13 CIR 92 (flat-rate expense regime), regional grant legislation — Texts on Justel