In Belgium

Rental profitability (rentabilite locative) is the most comprehensive measure of a rental investment’s financial performance. Unlike net yield (which only measures annual income vs cost), rental profitability includes:

  • Rental yield: net annual income after all expenses
  • Capital appreciation: increase in property market value over time
  • Leverage effect: using the tenant’s rent to repay a mortgage, building equity
  • Tax advantages: favourable CI-based taxation for private lettings

How it works

Total return calculation. Over a 10-year holding period: total rent received + property appreciation - all costs (acquisition, ongoing, tax, sale) = total profit. Total profit / initial equity invested = total return on equity.

Belgian advantage. The combination of CI-based taxation (low tax on rental income), no wealth tax on property, and capital gains exemption after 5 years makes Belgium particularly attractive for rental investment compared to neighbouring countries.

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Good to know
A property with a modest net yield of 3% can deliver total rental profitability of 8-10% per year when accounting for capital appreciation (2-3%) and the leverage effect of mortgage repayment.

Practical example

Sophie bought an apartment in 2016 for 200,000 EUR (50,000 EUR equity + 150,000 EUR mortgage). After 10 years: total net rent collected = 65,000 EUR, property value increase = 50,000 EUR, mortgage capital repaid by tenant = 55,000 EUR. Total wealth created: 170,000 EUR on a 50,000 EUR initial investment = 340% total return (or approximately 16% annualised return on equity).