You’re a self-employed sole trader living in Belgium, and you often, or even mostly, work from the house or apartment you rent. Can you deduct your rent as a business expense? As with most tax questions, the answer is “Yes, but…”.
Since the 2024 tax year (i.e. for 2023 income), the deduction of rent as a business expense is subject to new conditions. You now need to provide some mandatory information by adding an annex to your tax return. In this article, we explain how to do this.
Can you deduct your rent as a business expense?
Whether you’re self-employed in a main or secondary occupation, you have every right to deduct your rent as a business expense. That said, it’s unlikely your landlord will allow you to do so.
Excuse me?!
Yes, you read that right. If you deduct your rent as an expense, this impacts the way your landlord is taxed. For the rental of a private home, the landlord is taxed on the indexed cadastral income (‘revenue cadastral’ (RC) / ‘kadastrale inkomen’ (KI)) of the property, which is essentially a fictitious annual net rental value for the property, established by the government. The owner of a property that is used (partially) professionally is taxed on the actual rental income. In other words, they have to pay more taxes on rental income in the latter case.
If your landlord still allows you to use the property for business purposes, you can deduct your rent as a business expense provided you meet a few strict conditions.
Conditions for deducting your rental costs
- Your landlord must be aware of your self-employed activity, whether it’s your main or secondary occupation, and accept that you carry it out (partially) from their property.
- The rental contract must clearly indicate the area of the property that is destined for professional use and the area that is for private use.
- The contract must stipulate two types of rent: the rent for the professional part of the property and the rent for the private part. For the latter, the owner is only taxed on the cadastral income.
- The landlord has paid for the registration of your rental contract (page available in French/Dutch/German) within four months of its signature.
- As a self-employed sole trader, whether in a main or secondary occupation, you have an ‘information obligation’. Concretely, this means you need to add the new mandatory annex 270 MLH to your personal income tax return (page available in French/Dutch/German). If you have a company, the same applies for your corporate tax return. We explain more about this later in this article.
Check if you meet the above conditions before deducting your rent as a business expense. This will help you avoid unnecessary conflicts with your landlord and the tax authorities.
How to deduct your rent as a business expense in your accounting
First things first: when you’re self-employed, whether in a main or secondary occupation, you can never deduct your entire rent as a business expense. You can only deduct the rental costs that correspond to the part of your home used for your business. The breakdown of professional vs private use must be legally established in your rental agreement (see the second condition above).
What percentage of your rent can you deduct?
The deductible area of your rented home is indicated in your registered rental agreement. This is the area of the property that you use to carry out your self-employed activity. There’s no official rule on this, but it’s best to keep your professional use to a maximum of 15% of the total living area.
⚠️ Warning: In the event of a tax audit, the tax authorities have the right to come to your home and check what percentage of the property you rent is dedicated to your work. So it’s best to be honest from the start.
How to enter your rental costs in your accounting
- Every month, keep proof that you have paid your rent. If you pay the rent for the private and professional parts of the property together, indicate the separate amounts in the communication of your bank transfer. You can also create a separate overview in which you distinguish your business expenses from your private expenses.
- Send your monthly payment record to your accountant or upload it to your accounting software if you use a tool like Accountable. Because as a self-employed sole trader, you can easily manage your accounting yourself.
- In any case, keep all documents: your rental contract, proofs of payment, and any other agreements or correspondence with your landlord. This way, you can prove that everything is in order if the tax authorities come knocking.
- Prepare an annual declaration (the income statement) including the deductible rental costs in the appropriate category. (This step is not mandatory for natural person sole traders).
💡Accountable tip: to find out more about deducting rent as a business expense, visit deductibles.be, our website that lists all the deductible business expenses for people who are self-employed in a main or secondary occupation in Belgium.
How do you declare deductible rental costs in your personal income tax return?
We told you at the beginning of the article that since 2024, there’s a new mandatory annex to complete if you want to deduct your rental costs when you’re self-employed. Are you a self-employed sole trader? Then you need to add this annex to your tax return.
By introducing this new rule, the tax authorities are ensuring that owners are correctly taxed on the rental of their property. But let’s face it, this information obligation makes it more complicated to deduct your rent as a business expense. Want to do it anyway? No problem. We’ll tell you what you need to watch out for.
How to deduct your rental income as a self-employed sole trader in your tax return
There’s a new section E in box XIII of your personal income tax return. If you want to deduct your rent as a business expense as a self-employed person, you need to confirm this by checking the boxes next to codes 1072 and 2072.
Then, attach your completed annex 270 MLH to your tax return.
What information needs to be included in the annex to the tax return?
- The identification details of the tenant (you): last name, first name, national register number, etc. If you have a company, you’ll need to indicate the name and business number of the company.
- The owner’s identification details and the address of the rental property for which you want to deduct rental costs.
- The details of the lease contract, such as the amount of rent paid and the portion you want to deduct for tax purposes.
When should you not add an annex?
Do you receive an invoice for renting the professional part of your home? If so, you don’t need to add an annex to your tax return. In this case, the tax authorities will extract the information they need about the tenant and the rented property from the invoice.
The annex is also not required if you receive an invoice in the context of usage rights such as usufruct, superficies (building rights), or emphyteusis (long lease).
Do you want to file your tax return yourself as a self-employed sole trader? Don’t be discouraged! Accountable is here to help you. Upload the income and expenses related to your business, and we’ll help you complete your tax return correctly, step by step.
