Parties gather to scrap tax benefit on second homes

Parties gather to scrap tax benefit on second homes
Photo by Tierra Mallorca on Unsplash

A proposal to scrap a tax benefit offered to those who buy a second home has now gathered the support of three government parties – greens and socialists nationwide and in Flanders CD&V.

The benefit is based on an anomaly: no tax benefit is available for the mortgage on a main residence, but is available for a second home. The reason is the state reforms passed in 2014, which made first homes the responsibility of the regions, while second homes are the province of the federal government.

Flanders offered a housing bonus until 2020, but has now scrapped it, and has Brussels. Wallonia offers a ‘cheque habitat’.

But the federal benefit on second homes remains; Charles Michel when prime minister could never find the support to get rid of it, depending as he did on the votes of N-VA, Open VLD and his own MR.

The benefit for a second home owner – regardless whether the home is in another EU member state – amounts to a maximum of €705 a year. In addition, you can deduct the interest on the loan from any real estate income, such as the rent if you happen to rent the property out when not using it.

The subject is now likely to be pushed hard by its supporters in the coming budget talks within the government. Open VLD and MR will still oppose, but they no longer have the backing of N-VA – fiscally conservative whatever else they may be.

There is already a bill, filed by Groen and Ecolo in the spring, calling for an end to the benefit from 2022. However that bill, like any other measure with a chance of passing, affects only new mortgage contracts, not those already in existence.

"It is completely illogical that a young couple has to compete with an older couple who are looking for a second residence with saved money and receive a tax incentive for this," Groen MP Dieter Van Besien told De Standaard.

"It cannot be explained that the advantage for those second homes has not been abolished," said Joris Vandenbroucke (Vooruit).

That is a matter of principle for us, whether it generates money for the budget or not.”

Potential savings could be as high as €100 million in a year – the sum that it cost to pay out the benefit to 292,511 families in 2020.

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