Investing in property, or real estate, is a great way to diversify your income. That said, in Belgium, all income is subject to tax, including income from renting out your property. This tax on rental income raises a lot of questions: what is the exact amount of tax on rental income? Are private rentals taxed differently than professional rentals? Should you become self-employed if you rent out several properties? Here, you’ll find answers to all these questions.
- How is rental income taxed?
- Private property rental
- Private furnished rental
- Professional rental
- Do you have to be self-employed to rent out property?
How is income from property rental taxed in Belgium?
Rental income is taxed in different ways in Belgium depending on your status as a landlord and that of your tenant. There’s a difference between renting out property as a natural person or as a self-employed person, with or without a company. The tax on rental income is also different when you rent to a private tenant or to a company.
Private property rental: from a natural person to an individual
Most people rent out their first property investment as a natural person to a private individual. The rental income from this (second) property is subject to a special tax in Belgium. This is because taxes are not calculated on the actual rental income, but on an amount based on the indexed cadastral income, increased by 40%. This amount is added to your other income and taxed through the personal income tax system. If you’re in the highest tax bracket, you’ll pay 50% tax on this amount.
For a property with a cadastral income of €900, the calculation for the 2024 income year is as follows: €900 x 2.1763 (2024 indexation coefficient) x 1.4 = €2,742.14.
This amount is then added to your other income, and your taxes are based on the progressive tax brackets (25-50%). If you’re in the highest tax bracket (50%), you will pay a maximum of €1,371.07 in taxes on your rental income.
In short, for landlords, the tax burden is quite low compared to taxes based on actual rental income.
Private furnished rental: from a natural person to an individual
If you rent out furnished property to an individual, the rules are different. In this case, the taxes are split into:
- income from renting out the immoveable property (i.e. the property itself)
- income from renting out the movable property (i.e. the furniture)
- income from additional services (e.g. cleaning fees)
🏠 Tax on the income from renting the property itself is calculated as follows:
cadastral income x indexation coefficient* x 1.40
*In 2024, this indexation coefficient is 2.1763.
🛋 40% of your income from furnished rentals (e.g. a furnished student room) is taxed at 30%. However, you can deduct flat-rate charges of 50% for electricity, internet and water costs, etc. In other words, the tax burden for income from furnished rentals is around 15%.
🧹Do you offer additional paid services, such as monthly cleaning? This income, considered as ‘miscellaneous income’, is taxed at 33%. You need to declare this ‘miscellaneous income’ in Part II of your tax return, under code 1200/2200.
Professional rental
If your tenant uses your property for business purposes, the rental income is taxed much more heavily.
In this case, the property is considered a commercial property, and you are taxed based on the actual income minus flat-rate expenses of up to 40%. This amount is also added to your other income for the calculation of your personal income tax.
Let’s say you rent the same property, with a cadastral income of €900, for €900. The best-case calculation is as follows:
12 x €900 x 0.6 = €6,480.
If you’re in the highest tax bracket, you’ll therefore pay €3,240 in tax.
This is much more than for a private rental. So be careful if you rent a property to a self-employed person who works from home, for example. If that person deducts (part of) the rent as business expenses, you will pay more taxes as a landlord. To avoid this, mention in the lease that it’s forbidden to deduct the rent as a business expense.
Do you have to be self-employed to rent out property?
In Belgium, property rental is generally considered a private activity. It’s therefore not necessary to become self-employed, unless the rental activities grow in scale. Even in this case, you don’t need to immediately become self-employed or set up a company.
From a legal perspective, there’s no clear differentiation between renting out property as a private activity or professional activity. You can therefore rent out several properties without any consequences.
However, there are some indicators that may suggest property rental has become a professional activity for you. For example, if you borrow money to buy or renovate property, if you provide additional services, or if you systematically renovate property to rent it out.
What are the administrative implications of starting a business?
To rent out property as a professional activity, you can become self-employed as a sole trader or set up a company. Of course, this involves additional obligations and much higher taxes.
First of all, taxes will be calculated based on the actual rental income. In addition, will no longer benefit from the flat-rate deduction of expenses, as you’ll only be able to deduct your actual expenses.
If you’re a self-employed sole trader, your income will be taxed based on the progressive personal income tax system. You’ll also have to pay social security contributions. If you set up a company, you’ll pay 25% tax on your rental income. You’ll then have to find the most advantageous way to pay yourself.
Sole trader or company: what are the advantages?
If you regularly buy property to renovate, it may be worth becoming self-employed. The costs of repairs and materials can be high, and since you can deduct them, your tax burden will decrease. You can also deduct costs related to the purchase (e.g. notary fees and registration fees) and other professional expenses.
Frequently asked questions about tax on rental income in Belgium
What is the tax on rental income from an assisted-living property?
An assisted living property is a type of property adapted for the elderly. In some cases, rental income from this type of property may be exempt from taxes. The main conditions (among others) are that the property is recognised as an assisted-living property and that you do not make a profit from renting it out. Even as a natural person, you can rent out one or more assisted-living properties.
What is the tax on rental income from a holiday home or Airbnb?
The tax rates for renting out a holiday home are different.
First of all, you’re renting out a furnished property. This means that your rental income is split into income for renting out the immovable property (i.e. the holiday home itself) and income for renting out the movable property (i.e. the furniture). The income from renting the immovable property is taxed as described above, while you pay a 30% withholding tax for the income from renting out the furniture.
If you rent out property via Airbnb, you might also be offering services, such as cleaning fees. This makes invoicing and accounting even more complicated. Read more in this article on renting out property via Airbnb.
What is the tax on rental income from properties abroad?
The tax on rental income from foreign property is the same as that for property in Belgium. However, you risk being taxed twice because the country where your property is located also levies tax on rental income. To avoid this double taxation, check whether there is a tax treaty between Belgium and the country where you’re renting out your property and how this treaty deals with the taxation of rental income. Here, we’re assuming that you’re renting out a property for a long period. If you’re renting out your foreign property as a holiday rental, read the answer to the question above.
When should you start a professional rental business?If you want to renovate and/or rent out a lot of properties or build up a full income from renting out property, it’s better to become self-employed or set up a company. You will pay more taxes, but you’ll be able to deduct your expenses, and you’ll be complying with your tax obligations. Also, take into account additional administrative costs. Handy accounting tools, such as Accountable, will help you find your way.
