Tax benefits for renovating your house as a couple or family in 2020

- - Category Constructing or renovating

Imagine yourself, Emma and Arthur are a young couple with children who want to buy and renovate their first home. They have mapped out the perfect renovation plan, they know exactly what they all need and how much it will cost, but they also want to know whether the costs can still be somewhat reduced with some tax benefits or premiums. With the advantages below, we offer some basics with which they can renovate in 2020.

Registration fees

Cancellation of the Flemish housing bonus

Let's get one thing straight out of the way. The Flemish housing bonus no longer exists since 1 January 2020 and was replaced by a reduction in registration fees from 7% to 6%.

Registration tax

If they buy a house or apartment, a registration tax of 6% applies from 1 January 2020 if it is the only house and the buyer starts living there within two years. These costs are paid when the deed is executed.

Two advantages apply to modest houses. On the one hand, the registration fees for these homes are 5% instead of 7%. In addition, there is an additional exemption for the first 80,000 euros for modest homes with a purchase price of a maximum of 200,000 euros or homes of a maximum of 220,000 euros in core cities or the Flemish periphery around Brussels. So Emma and Arthur enjoy an additional discount of 5,600 euros if they choose this option.

Extra reduced rate for energy renovations

If Emma and Arthur choose to undertake major energy renovations within 5 years of purchasing their family home, they can benefit from an additional reduced 5% rate on registration fees. For this, the renovations must meet the conditions to receive a positive energy performance certificate (EPC). This concerns renovations in which the heating, cooling, air circulation, insulation, windows, etc. must meet the energy target by 2050.

Renovation loan

This is essentially a traditional installment loan, but there are some differences compared to the mortgage loan.

  • This is a loan up to a maximum of 50,000 euros
  • There are no notary fees
  • The bank does not request guarantees
  • You can get this loan more easily than a mortgage
  • The interest for a renovation loan is higher than with a mortgage
  • A renovation loan is tax deductible, but take your current loans into account. If the home deduction is already completely full, you will no longer gain any extra tax benefits. Then you can see whether a re-draw or refinancing of your current loan offers better benefits.

We definitely recommend Emma and Arthur to inquire at their banking institution and municipality if they are eligible for a tax discount or premiums. Also check whether you are entitled to a social loan through the Flemish government.

Green energy loan

Through the Flemish Energy Houses, the family can also take out an energy loan if they can proof that half of their investments are spent on energy-saving renovations such as insulation, high-efficiency glass, solar panels or the purchase of a new solar boiler.

This interest-free loan (0% interest) is eligible for people who belong to the 'priority target group'. In addition, they can receive free support to determine which works and administrative matters must be arranged.

VAT rate of 6% for renovations

The home can be renovated by the family at the VAT rate of 6%. There are of course a number of conditions attached to this.

  • The property is older than 10 years
  • The property serves exclusively as a private home. Part of it may be used to practice a profession.
  • The rate applies to works related to the interior, exterior and maintenance of the home.
  • All works are invoiced directly to the end user. This means that the delivery and installation of the materials must be done by a contractor.

So keep in mind the type of renovations you want to carry out and the age of the home so that you can enjoy this VAT rate.

Other benefits

In addition to the tax benefits, there are also many grants and financial benefits for all kinds of renovations that Emma and Arthur can request from governments, municipalities, provinces and network operators. You can get a full overview of the possible grants in your municipality here.

Be sure to take a look if you can count on the overall renovation grant. You can request this as an owner, but it depends on your income, your home, other properties and your invoices. The works are also divided into 4 categories for which you must be able to submit invoices of a minimum of 2,500 euros (excl. VAT) per category.

What benefits are worth it?

As you can see, there are many tax and financial benefits that Emma and Arthur can use to pay for part of their renovation work. Although this family can certainly enjoy a few, it is important that you consider for yourself which of these benefits are applicable to your home, home situation and work. We want to provide this with these basic tips so that you can renovate cheaply to make your home your dream home.

Still need some practical tips to plan your renovation or renovation?

View our other blogs in the building and renovating category. Discover how you can rebuild cheaply and how your planning ensures that you can save money.