“With second homes, many people wrongly think that they are no longer entitled to the housing bonus. However, they can save a nice amount by doing so,” says tax teacher Koenraad Tranchet. Who can still count on the federal housing bonus today, or the lesser-known Flemish variant? Where do you enter this on your tax return? And which snags should you watch out for?
Tax teacher Koenraad Tranchet checks a Simplified Declaration Proposal (VVA) many times every year. These are tax forms that have already been partially completed and are in principle ready-made, although it is best to read them again.
Tranchet gives the example of a married couple who purchased a second home in addition to their own home in 2023 and had their VVA checked by him. “The loan certificate for the purchase of the property was in MyMinfin, but there was no trace of it in the VVA,” he says. “The tax authorities’ algorithm had picked up on the fact that the couple had bought that second property in which they did not live. Its cadastral income was also included. By entering the interest on the loan, I was able to neutralize the taxes on it with the tax benefit.”
The interest on a loan for the purchase or construction of a second home or investment property can be deducted from the net taxable real estate income, so that it reduces or – as here – disappears completely.
The ‘federal housing bonus’ continues to apply to existing contracts
The couple can still use the federal housing bonus that has been abolished since the beginning of this year. Who before January 1, 2024 – look at the deed date! – took out a loan for a second home or investment property, can still receive a tax reduction on the capital repayments and the premiums for the outstanding balance insurance.
This favorable tax regime has been abolished for all contracts entered into since January 1, 2024. But existing contracts concluded before that date can still be contributed as long as the loan is valid.
How and where should you enter this?
“You complete the – limited – capital repayments code 1(2*)358the interest code 1(2)146 and the premiums for the outstanding balance insurance (on certificate 281.62) – if fiscally useful – for expenditure on long-term savings: 1(2)353.”
“Please note that you may only enter the amount stated on the certificate if the amount borrowed does not exceed the limit stated in the explanation. If it is higher, you must multiply the capital repayments paid by that amount and then divide by the amount borrowed. It is that result that you can enter.
Tip: “If you have any questions about this, it is best to seek assistance from a tax expert. After all, additional restrictions apply with regard to mortgage registration.”
Who is still entitled to the federal housing bonus?
“Due to the emphasis on second homes and investment properties, many people do not consider that they can also use that federal deduction for loans for the purchase of their only home in 2023 or earlier,” Tranchet explains. . “Yet they can make a nice amount of money from it.”
Which cases are we talking about?
“Not everyone immediately goes to live in the first home he or she bought and not everyone continues to live in their only home. Let me give you a few examples.”
The resident bought another home in 2023
“This happens so often: a young person still lives at home and buys a home, but does not immediately move in. If he were to do so, no deduction is possible, because the deduction for the home in which you are domiciled has been abolished since 2020. If the owner is not going to live there for the time being – because he rents out the property, for example – he can perfectly submit the loan repayments for the federal tax credit. After all, it is not about the home in which he is domiciled, and that is the condition for being able to use it.”
Owner moves in together
“This is also a classic scenario: someone buys their own home and starts living there, but then moves in with their partner, or in a jointly purchased or rented home. As soon as you are no longer living in your own home at the end of 2023, you can submit the loan for the federal tax credit.”
And what about the Flemish housing bonus?
“There are still offshoots of the Flemish housing bonus that still generate a tax reduction.” For example for anyone who took out a loan to buy or build a home between the beginning of 2016 and the end of 2019 (deed!). However, the financially interesting tax benefits from before 2020 are still in force for those who took out a loan at that time. To the extent that the loan still meets the conditions, it can still be included in the tax return every year.”
How and where should you enter this?
“You fill it in code 3(4)334the premiums for the outstanding balance insurance 3(4)335.”
Combination with long-term savings
Anyone who took out a loan with a deed date in the period from the beginning of 2016 to the end of 2019 can also combine this tax reduction with the federal deduction for long-term savings. “After all, in addition to the maximum basket of that integrated Flemish housing bonus – up to 2,280 euros (2,360 euros from three children) – they also have a separate maximum basket of 2,350 euros for their long-term savings such as branch 21 and branch 23 savings insurance policies. This may also include outstanding balance insurance that accompanies a loan. The fact that these are different baskets is something that, to my surprise, even some bank advisors do not appear to know.”
How and where should you indicate this?
“So you can submit those savings insurance policies, namely with the codes 1(2)353.”
Example: couple with two loans
In 2018, a couple took out a renovation loan for the home in which they live. They still contribute that loan every year for the regional housing bonus, so 2,280 euros each in a 40 percent tax benefit. In 2023, they bought an investment property with a loan that they can now contribute to another basket, namely that of the federal tax credit for long-term savings (30 percent). “Of course, the basket can be limited according to their individual taxable income. Their regional housing bonus will decrease to 1,520 euros each, but they now use two baskets, so they benefit from it. Moreover, they also save for pensions. So that’s three full baskets already.”
“For the contracts concluded before 2016 you will find the codes further down in box IX. This tax reduction cannot usually be combined with a federal deduction for long-term savings because the tax baskets are already full.”
*depending on single, married or legally cohabiting couple and who is the owner
Do you have a question about your tax letter? Come to the Tax Marathon!
For most Flemish people, the annual tax return means stress. It remains a challenge to find your way through the maze of codes in your tax letter. A mistake can cost you a lot of money. HLN and VTM News will come to your aid on Saturday, May 25, during the second edition of the Tax Marathon. More than 50 tax experts are available for 12 hours to help you complete and/or check your tax return for free. Tax expert Michel Maus and news anchor Birgit Herteleer will also be there.
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