​Good news for real estate property buyers: the investment deduction has changed! (Source: Dewaele)

Since January 1, 2025, there has been a significant change in the investment deduction in Belgium. This is good news for anyone purchasing real estate for professional use, as you can now benefit from a favorable tax advantage if you are a commercial real estate investor.

What exactly is the investment deduction?

In brief: the investment deduction is a tax incentive for those investing in professional assets like machinery, furniture, computers... and therefore also in real estate for professional use. This measure allows you to deduct a percentage of this investment from your taxable income, which can be particularly beneficial for reducing capital gains taxes.

What has changed since January 1, 2025?
Until recently, the investment deduction operated with fixed percentages. But from the beginning of this year, the system has been reformed: the focus is now on the nature of the investment. Sustainable and innovative projects now receive additional support through a higher deduction.

What does this mean for you as a real estate buyer?
If you invest in real estate for professional use, such as an office, practice space, or commercial building, you could be eligible under this new scheme. Even if you use part of your home for professional purposes, you can benefit from tax cuts.

The basic deduction is 10% and applies to new tangible fixed assets used professionally in Belgium and depreciated over at least three years.

What is specifically eligible for real estate?

• Purchase of new business real estate: If you buy a new building for exclusive commercial use (and if you meet the conditions as a sole proprietor or small company), you can apply the basic deduction of 10% on the purchase price and potentially benefit from depreciation recapture.
• New construction or major renovation: If you construct a new building for professional use or carry out a major renovation of an existing part of your professional real estate, the investments made may be eligible.
• Fixed installations and equipment: Elements fixed to the building, such as integrated furniture, ventilation or heating systems, elevators, and electrical installations, may also be eligible, impacting your real estate income positively.

Note: The purchase of the land itself is excluded from the investment deduction.

Enhanced thematic deduction up to 40%
In addition to the basic deduction, there is also an enhanced deduction of 40% for sole proprietors and small companies. This higher deduction applies to specific investments listed by the government that contribute to sustainability and innovation. If you invest in energy-efficient renovations, renewable energy sources (like solar panels), or other eco-friendly solutions in your real estate, you have a good chance of qualifying for a higher investment deduction percentage. This aims to encourage investment in "green" and future-oriented buildings.

| Suppose you buy an old office building with the intention of renovating it to be more energy-efficient. You plan to install new windows with high-performance glass, add extra insulation for the facade and roof, install an energy-efficient heating system, and solar panels. The costs of these sustainable adaptations may, under certain conditions, qualify for an investment deduction, meaning a reduced tax bill for you. |

Pay attention to the conditions
Not all investments automatically qualify. The real estate (or part of it) must be effectively used for professional purposes, and there are specific criteria to determine if an investment is considered sustainable or innovative.

Conclusion
In short, the new investment deduction can be a great financial opportunity when purchasing your real estate, especially if you focus on sustainability. Whether you are a property investor or part of a real estate business, getting well informed and evaluating how to make the most of this scheme can be highly beneficial.

Thomas Verschaeve

The information provided on this page is general in nature and should not be considered professional legal advice tailored to specific or personal circumstances.