Buying real estate abroad: a notary explains how to avoid the pitfalls

Buying real estate abroad: a notary explains how to avoid the pitfalls
Buying real estate abroad: a notary explains how to avoid the pitfalls

Find the testimonies of Belgians living in Spain

1. The type of financing

“The most common solution is to obtain financing via a loan in Belgium. This will be much simpler than borrowing in the foreign country where you are buying, as banks require a guarantee. If you already own a property in Belgium, This will be your guarantee. If you don’t have one, it’s more complicated.”

2. Tax exemption

Are you at risk of being double taxed on your property? Check if there is a double taxation prevention agreement (CPDI) between Belgium and the country in which you are buying: they guarantee that goods and profits abroad are only taxed once. The good news ? There are more than twenty countries: Spain, France, Italy, Portugal, Germany, Netherlands…

Becoming a landlord in Spain: instructions

3. Inheritance and retroactive taxes

It is important to know what you are getting into, taking into account the before purchase (taxable activities) and after (inheritance). “If we live in Belgium then in France and we have had taxable activities in France, for example, this can fall on us! There are retroactive taxes, a tax shift that follows you.” The same goes for the succession: prepare everything. “The laws that apply in the event of death vary from one country to another. In Spain, it is not the children who inherit as in ours, it is the spouse! It is also advisable to find out about the ‘taxation at the inheritance level.’

4. Tax declaration

Since the 2022 tax year, it is obligatory to declare your foreign real estate to the Belgian tax authorities! And in the event of omission, the fines can be steep! “The law provides for the calculation of a cadastre, as with us, for property abroad, by applying a specific flat-rate taxation to second residences.” Don’t panic though. In 2024, the rate of 5.3% on the market value applies; the cadastral income for a property worth €100,000, for example, therefore amounts to €337.02.

And outside of Spain?

Along with Spain, we find France, Italy, the Netherlands and Portugal in the top 5 of Belgians’ favorite destinations for buying property abroad. What else should you watch out for?

1. In France

The French real estate market presents notable differences, particularly with regard to taxation. In Belgium, property taxes are based on cadastral income, while in France they depend on the cadastral rental value. Notary fees and agency fees are generally higher in France. Finally, be aware that rental laws in France are more strict and protective for tenants than those here.

2. In Italy

Please note: in Italy, the purchasing process is often complex and requires numerous administrative formalities! Also be aware that taxes vary by region, and transaction costs may also be higher due to transfer taxes. Property taxes are also higher than those in Belgium. On the other hand, in certain rural regions, real estate prices are much lower than what we find back home.

3. In the Netherlands

In the Netherlands, the real estate market is often more fluid and transaction times are shorter than in Belgium. However, prices may be higher in some areas. Houses and apartments tend to be less spacious than here due to the higher population density. Finally, be aware that mortgage loan conditions and interest rates as well as income requirements vary.

4. In Portugal

Portugal offers attractive tax incentives for foreign retirees, including the non-habitual resident regime with tax exemptions on foreign income for a period of 10 years. Be careful, however, of the tax incentives which exempt new foreign owners for the first years and then come to an abrupt end. On the other hand, purchasing procedures are simplified, the processes clear and efficient.

So where are you going?

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