House renovation: conditions for tax benefits relaxed

For the renovation of certain houses tax benefits can be obtained. As from 1 January 2011 these works should no longer be provided by a registered contractor. It suffice that these works are provided and invoiced to you. The legislation is relaxed under European pressure.

Houses rented for a reasonable price

If you own a house and rent it via a social rental agency you can obtain tax benefits when renovating that house. It should concern a house of which you are the owner-landlord. The works concerned are renovation, rebuilding, repair and maintenance of the house. Cleaning of the house is excluded. Also works concerning the digging of a garden or the installation of a swimming pool or sauna do not qualify for the tax reduction.

The key conditions to be fulfilled are:

The house is at least 15 years old;

The renovation cost amounts at least to 10.600 EUR (vat inclusive, income year 2011).

For works performed before 1 January 2011, the contractor should be registered. Now the rules are relaxed and it suffice that the works are invoiced to you as owner.

If you fulfill all conditions, the tax benefits amounts to 45% of the investment costs. The tax reduction is spread over nine taxable periods. So you can annually deduct 5% of the expenditure from the amount of the tax due. The annual tax reduction can be maximum 1.060 EUR (income year 2011).

The tax reduction cannot be combined with other tax benefits such as the deduction of professional expenditure, investment deduction, tax reduction for energy saving expenditure and expenditure for renovation of houses in a positive city policy zone.

The contractor should issue an invoice mentioning:

Where the works were performed;

That the house has been in use for at least 15 years;

A specific statement that the works qualify for the tax reduction.

This invoice should be kept by you together with other supporting documents (such as the lease contract) and be available for the tax authorities.

Housing renovation in problem areas

If you own a house in a problem area and you want to renovate this house, you can also obtain a tax reduction. It should concern your own and only house. If you own a second house, you do not longer qualify. Besides this the house should be located in a “positive city policy zone”. A list of cities and streets qualifying in this respect can be found on the website of the Ministry of Finance.

To be able to apply the tax reduction, you should comply with the same conditions as set out above for the renovation of houses rented through a social rental agency.

Only the amounts differ. The total cost of the works should amount to at least 3.530 EUR (income year 2011).

The tax reduction is 15% of the actual expenditure. The total amount of the tax reduction cannot exceed 710 EUR per year and per house (income year 2011).

Also non registered contractors qualify

The obligation to work with a registered contractor is deleted. It suffice that the works are provided to and invoiced to you as the owner of the house. The Belgian legislation concerning the registration as contractor seemed not to be in line with the free movement of services. Under European pressure Belgium adapted its legislation.

The relaxed regime is applicable to all works performed as from 1 January 2011.