Around this time of year those that own a house or flat in Flanders will receive their annual property tax bills. In Flanders property tax is called “onroerende voorheffing”. But how is the level of property tax levied on your home calculated and how often do you have pay? Is the level of property tax the same as the property’s “cadastral income” (kadastraal inkomen)? In an interview with VRT News the Flemish Taxation Department’s Kris De Sagher answers numerous questions concerning property tax.
Property tax can be levied on plots of land, houses, flats, parking spaces and lock-up garages. The tax is calculated based on a property’s cadastral income. The property’s cadastral income is index-linked and rises each year according to the rate of inflation. In most cases property tax levied on a given property is payable by the person that owned the property on 1 January of that year.
If there is a division between the bare ownership and usufruct over a property, for example if a parent has gifted their home to their child(ren) but continues to live in it themselves, it is the usufructuary (in this case the parents) that pay the property tax.
1. What is cadastral income?
Cadastral income (KI) is the notional annual net income a property-owner would have received if there were to have rented out their property in 1975. Cadastral income is not based on current market conditions, but rather on the rents charged almost 50 years ago. When calculating the cadastral income various factors are taken into account. These include the location of the property, its size and the level of comfort the property offers. Even for newly built homes, the cadastral income is calculated as if we were still living in 1975.
Kris De Sagher told VRT News that "It was orgionally the intent that the level of cadastral income would be revised at regular intervals, for example every 10 years. However, this would be a mammoth task and so it has never been done. The level of cadastral income rises according to the rate of inflation each year. In some cases the cadastral income might be recalculated if work has been carried out to improve your home (for example the installation of an additional bathroom, central heating, an extension…). Home owners are legally obliged to inform the authorities of any modifications they might make to their property so that if deemed necessary the property’s cadastral income can be modified. Those failing to do so risk a fine.
2. How is the level of property tax levied calculated?
The level of property tax levied is based on a combination of the index-linked cadastral income and so-called “opcentiemen” (addition cents) levied by your local municipal and provincial authorities. As stated previously in the article the level of cadastral income increases each year according to the level of inflation at the start of the year.
Kris De Sagher explains that "Some of the property tax you pay goes to the Flemish Government, but most of it goes to the municipal and provincial authorities. They can decide for themselves the level of ‘additional cents’ they levy on your property”.
In some cases property owners are entitled to a rebate on their property tax. For example, if they have carried out renovation work to make their home more energy efficient. Or if they have had another child”.
3. How many times a year do you have to pay?
Property tax bills are sent out once a year. The Flemish Taxation Department says that 98% of property-owners in our region receive their property tax during the calendar year for which the tax has been levied. The calculation is based on the situation on 1 January of that year.
But what if you sell your property during the course of the year? Often the notary already has already deducted/added the property tax that would be due at the time of sale. If, for example, you buy a house in June and the property tax for the house the previous year was 1,200 euros, the notary might add 600 euro to the sale price to compensate the vendor for the 6 months property tax that they will have to pay for a house in which they no longer live.
It could be the case that you receive more than one property tax assessment notice during the same year. If this if the case you will not have to pay twice. The Flemish Taxation Department says that it always makes sure that there is at least 6 months between assessment notices being sent out.
4. What if you can’t pay straight away?
The amount of property tax payable is often a large sum. The bill needs to be paid within 2 months of it having been sent out. Those that have difficulty paying the full amount all in one go can ask to pay in installments. However, those that choose to do this will have to pay interest.
5. What if you dispute the amout quoted on your property tax bill?
If you believe that a mistake has been made in the calculation of your property tax bill, you can lodge an appeal. However, lodging an appeal doesn't mean that your payment will be put on hold in the meantime.
As investigating appeals that have been lodged often takes more that 2 months those that have lodged an appeal are advised to pay the amount due in order to avoid eventual interest payments if the appeal is rejected. If the appeal is upheld any sum that is refunded will be refunded with interest.