Rental income and taxes: what every landlord should know

With the tight rental market right now, buying to let is worth consideration. As a private individual, how such profit will be taxed depends heavily on the circumstances. Be aware that tax rules can also be subject to change.

For the purposes of Belgian personal income tax, private rental income is seen as income from immovable property. Note that you are not usually taxed directly on the rent received, at least not if letting a home for private use. Instead, the tax authorities look at the property’s cadastral income, or CI. The CI is a fictitious annual net rent established by the government based on values from 1975. It is indexed annually and then increased by 40% to determine the taxable income from immovable property.

Example: letting for private use

Suppose you own an apartment with a non-indexed CI of EUR 800 and let it to a private individual for EUR 650 per month, or EUR 7,800 annually. As the tenant is using the property exclusively for private purposes, you needn’t declare the actual rent. Your tax return refers solely to the CI. The taxable income is then calculated as follows: 800 × indexation (2024*: 2.1763) × 1.40 = EUR 2,437.46. This amount is combined with your other income and taxed at progressive rates. That is significantly lower than the tax on your real rental income of EUR 7,800 would be; this is a deliberate decision made by the legislator to encourage private letting.

* The indexation coefficient for 2025 is 2.2446

Good to know: if you own a second property you are not renting out, the tax follows the same calculation. You will again need to declare the CI (indexed and increased by 40%) annually, even if there is no rental income involved. Your own personal residence is the exception. The CI for this is exempt from personal income tax, excepting any rented portions or periods (e.g. via Airbnb). In such a case, you must declare the CI in proportion to the days it was rented out. Also read: Is a buy-to-let property a smart investment?

Private vs. commercial rental: a big difference

If a tenant is using your property for business purposes, this affects the tax treatment. If you let a property to a company or individual for commercial use, e.g. as an office or a residence that also includes a practice, the tax authorities will tax you based on the real rental income (after costs). That includes both the actual rent and any rental benefits such as maintenance and repair costs that are normally borne by the landlord, but are being charged to the tenant.

More specifically, the net rent is taxed as the gross rent received minus a 40% flat-rate deduction. This deduction covers maintenance, repairs, etc., and amounts to 40% for buildings. To prevent abuse, the flat-rate deduction is also capped at two thirds of the revalued CI (CI × a legal revaluation coefficient). This cap prevents, for example, a business manager from having their own business pay them an exaggerated amount of rent to avoid taxes.

Example: rental for commercial use

Let us consider the same apartment from above (EUR 800 CI and EUR 7,800 annual rent), but it is now rented to a company or a sole trader for use as an office. You will be taxed on the net rent. Gross rent of EUR 7,800 - 40% flat-rate deduction (EUR 3,120) = EUR 4,680 net. As this is higher than the minimum (indexed CI × 1.4 was EUR 2,437.46), the taxable income from immovable property becomes EUR 4,680. If you are renting to a commercial tenant, you may consider raising the rent in compensation. Many landlords do charge more rent for a commercial property or office specifically to compensate for the higher tax.

Mixed use

You can also rent out a property for combined private and business use, e.g. a residence where one room is being used as an office or practice. In case of such mixed use, you will need to split up the private and business portions. Make sure that the rental contract explicitly notes this division (e.g. 60% commercial, 40% private use). In your tax return, you will be taxed for the private portion based on a corresponding portion of the CI and based on the net rent for the commercial portion.

Example: rental for mixed use

You rent out a house (EUR 800 CI), of which the tenant uses 60% for business and 40% for private use at EUR 650 per month. The rental contract notes this division. Your taxable income =

• 40% private portion → EUR 800 × 40% x 2.1763 index × 1.4 = EUR 974.98 (private portion)
• 60% commercial portion → (EUR 7,800 × 60%) – flat-rate deduction (40% of EUR 4,680) = EUR 2,808 net commercial portion

Together, it amounts to EUR 3,782.98.

What about letting a furnished home?

When you let a furnished home, you are receiving two types of income: income from immovable property for the use of the building, and movable for the furnishings. You must declare the movable portion of the rent separately. By default, 40% of the total rent will be considered ‘furniture rental’ unless the contract specifies a different reasonable division. For this movable portion, you can deduct 50% as a lump sum and the balance will be taxed at 30% withholding tax. In practice, that corresponds to 15% actual tax on the full rent for the furnished portion. This is relatively favourable. The immovable portion will still be taxed based on the CI if the tenant is living in the property as a private residence. This means furnished letting usually results in slightly more tax than unfurnished property, but it can also be used to justify a higher rent.

When are you considered a professional landlord?

Normally, rental income on property for private individuals is taxed according to the rules we’ve just described. The tax authorities may decide to intervene if you are letting property at a larger scale, for example if you are managing multiple properties with a clear profit objective, offering additional services, deploying staff, etc. This may lead to reclassification of your rental income as business income.

In that case, the tax treatment will be very different. All your rental income will be combined with your other professional income and taxed at normal progressive rates (up to 50%). It does mean you will be able to deduct all actual costs such as maintenance, insurance, property tax, etc., so you are only taxed on the profits. However, you will also be required to affiliate yourself with a social insurance fund as a self-employed individual and pay quarterly social security contributions. As a landlord, reclassification often leaves you worse off due to the higher taxation and social security obligations.

Fortunately, it doesn’t happen arbitrarily. Simply owning multiple properties is not enough to mark you as a professional. The tax authorities also take into account such factors as the number of rented properties, their relation and size, how much time and organisation you are putting in and whether you provide additional services. If you buy two storage sheds to let out of your own money, the authorities probably won’t make trouble. If you have bought 14 apartments to let, taken out various loans and are handling all the administration yourself, that’s a different story. If you do intend to buy multiple properties to let, it is highly recommended to consult a tax or property expert first.

How long can you rely on these rules continuing to apply?

Belgium’s approach to taxation of rental income may be seeing some major changes soon. The current system with its outdated cadastral income is under attack. People have been calling for the real rental income to be taxed instead of this fictitious value in order to do away with big differences between new and older properties and increase government revenue.

Such a reform would cause quite a few landlords’ tax bills to go up. Calculations by interest groups have shown that a 25% taxation of the real rent would correspond to having to give up close to another month of rental income annually. Landlords may well decide to raise rents if this goes into effect, or perhaps to sell off their property. That could affect the rental market.

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