We have analyzed the distribution of Cadastral Income, which defines Property Tax in Belgium. This article explains why, from a statistical point of view, property withholding tax can be considered opaque and unequal!
A few reminders
Cadastral income
The Cadastral Income (RC) forms the basis for collecting the Property Tax (PI) and for determining the property income subject to personal income tax.
The RC is a fictitious income that corresponds to the average annual net income that a property would provide to its owner. In people's minds, it is supposed to be representative of the "quality" of a property.
This fictitious income was calculated by the Administration Générale du Patrimoine (AGDP, formerly the Cadastre) for the reference year 1975. Since then, it has not been updated: to remedy this problem, the RC is indexed annually. For 2023, SPF Finances has defined an indexation of 2.0915.
What's the impact on property tax?
The Précompte Immobilier (PI) is calculated as follows:
Précompte Immobilier = RC indexé x Taux Global
Global rate = regional rate + provincial rate + municipal rate (additional centimes).
The regional rate is set by the region, the provincial rate by the province, and the municipal rate by the communes. In Brussels-Capital and Wallonia, the regional rate is 1.25%. In Flanders, the rate is 3.97%.
So, the higher the Cadastral Income (CR), the higher the withholding tax. Similarly, if a RC is incorrectly valued (upwards or downwards), so too will the Précompte Immobilier.
What happens if the CR is reassessed?
Certain modifications to the property give rise to a reassessment of the RC. While this revaluation is rarely requested by the taxpayer directly, it is initiated by the administration (the AGDP) after learning of the modification from a third party (e.g. a building permit application).
Since it is not possible to re-evaluate the rental value of the property in 1975, the AGDP mainly evaluates the RC on the basis of points of comparison, for example in the same district. As such, the Précompte Immobilier is an opaque tax.
The real problem: the 1975 RC no longer corresponds to reality
The problem with Cadastral Income lies in its updating: the indexation applied is global, i.e. everyone sees their RC increase in the same way. And this without taking into account changes in the characteristics of each property or the attractiveness of their location.
Similarly, the picture of potential rental income as calculated in 1975 no longer corresponds to the Belgian market in 2023: some districts and municipalities have seen their quality of life increase drastically. Very few communes have seen their Cadastral Income revalued globally since then. [1]
[1] "Revaluation of the cadastral income of dwellings after conversion", Report by the Court of Audit transmitted to the House of Representatives, 2013.
Inequalities in cadastral income in Brussels
We have seen that the Cadastral Income calculated in 1975 may no longer correspond to the state of the market. Some communes have seen their prices rise, others stagnate: but all have seen their RC indexed in the same way.
SmartBlock has studied Cadastral Income in the Brussels Region:
The map seems to indicate that the highest CRs are indeed located around the wealthiest municipalities, with the exception of a few cases: Etterbeek, Molenbeek or Koelkeberg have either low or high CRs that do not correspond to current market value.
Let's now look at the Cadastral Income, Property Tax and Prices (€/m2) for each commune:
The relationship between cadastral income and property prices (apartments) then reveals disparities:
- The Précompte Immobilier is generally lower in Saint-Gilles than in Anderlecht (for the same type of property).
- Ixelles pays the same property tax as Molenbeek or even Koekelberg, while the value of real estate in Ixelles is 30% higher.
- Etterbeek also reports a very low RC compared to the value of property on its market.
- Additional centimes, which are determined by the municipality, do not offset this effect.
💡 Why this effect? The Précompte Immobilier is based on the Revenu Cadastral, calculated in 1975. Since 1975, certain communes have seen their prices soar with the quality of life: Etterbeek and Saint-Gilles are good examples. See: the evolution of prices in Brussels-Capital.
Cadastral Income has not adapted to this evolution, and some communes that have not seen the value of their properties evolve pay the same RC as those whose market has caused prices to soar.
... and more widely in Belgium
But this effect is not confined to the Brussels-Capital Region, since the indexation of the CR is identical everywhere. As a result, there are major disparities between provinces and districts, as well as at the national level.
Smartblock has studied the median RCs of several Belgian cities, for typical properties: 3-bedroom single-family home and 2-bedroom apartment.
Typical house (3 bedrooms)
| Median cadastral income | Median selling price | ratio | |
|---|---|---|---|
| Brussels-Capital | 1.279 € | 459.000 € | 0.28 |
| Namur | 974 € | 275000 € | 0.35 |
| Antwerpen | 793 € | 345000 € | 0.23 |
| Liège | 684 € | 199000 € | 0.34 |
| Mons | 683 € | 195000 € | 0.35 |
| Brugge | 675 € | 329000 € | 0.21 |
| Gent | 552 € | 358000 € | 0.15 |
| Charleroi | 550 € | 169000 € | 0.33 |
Gent stands out significantly from the other municipalities, with a very low average RC compared to high prices (in the top 3) for 3-bedroom homes. Antwerp and Brugges follow for the same reasons.
2-bedroom apartment
| Median cadastral income | Median selling price | ratio | |
|---|---|---|---|
| Brussels-Capital | 1.243 € | 294.000 € | 0.42 |
| Namur | 1.086 € | 219.000 € | 0.50 |
| Liège | 981 € | 179.000 € | 0.55 |
| Mons | 975 € | 160.000 € | 0.61 |
| Charleroi | 941 € | 129.000 € | 0.73 |
| Gent | 902 € | 310.000 € | 0.29 |
| Antwerpen | 870 € | 229.000 € | 0.38 |
| Brugge | 862 € | 269.000 € | 0.32 |
It's already remarkable that the median floor area of a 2-bedroom apartment is similar to that of a 3-bedroom house (although the surface area is not the same: ~90m2 and ~140m2 respectively).
As a result, the ratio between CR and property value is very high. It is in Charleroi and Mons that the ratio is highest in relation to the median selling price of this type of apartment. Once again, the three Flemish cities show a very low RC compared to property prices.
💡 What interpretation? For an identical property, Cadastral Income does not necessarily correlate with property prices (nor with the rental market, which also correlates with market value). Global indexation does not correct this phenomenon.
Once again, the relationship between CR and Market Value highlights the disparities:
- The province of Liège has the highest median cadastral income in relation to the market value of real estate (houses and apartments).
- Cadastral income is highest in Brussels-Capital and Flanders. But Flemings have a particularly low RC compared to the market value of their property.
- There is a marked difference between Flanders and Wallonia, with West Flanders and East Flanders showing the most favorable ratio overall.
Conclusion
- The property tax is based on the Cadastral Income, a fictitious income established in 1975 and which has not been revised since.
- Changes in the real estate market have led to an increase in the value of property in certain communes, without the Cadastral Income being adjusted accordingly.
- There are disparities between neighborhoods and communes: for a similar property, the RC is identical in communes with very different real estate markets (purchase prices, rental market).
- As a result, owners of properties with a high market value pay a similar withholding tax to those in less-favored areas.
- Revisions of the Cadastral Income are made in dribs and drabs when major modifications are made to a property. It is then possible to make a claim if the new RC is inadequate, but it is preferable to come accompanied by an expert and concrete data justifying the RC submitted to the administration.
💡 A re you paying too high a Précompte Immobilier? SmartBlock has set up a simulator that lets you calculate your RC and compare it to your neighborhood and commune.
Other statistical remarks...
- We have seen the press panic over the increase in additional centimes in certain communes in 2023 (e.g. Forest, Schaerbeek). We need to put into perspective the fact that communal additional centimes represent a small proportion of the overall calculation of the rate applied to the RC. It is in fact the difference in cadastral income between communes that is the main factor. drive IP differences between communes. Here's an example:
- Schaerbeek : 4191 centimes additionnels → median IP €290
- Woluwe-Saint-Pierre: 1,725 additional centimes → median IP of €451
- On the other hand, the increase in the indexation of Cadastral Income from 1.9084 (2022) to 2.0915 (2023) has a direct impact on the real estate withholding tax, since it is this value that serves as the basis multiplied by the regional/provincial/municipal rate.
- Calculating the Cadastral Income is not straightforward: SmartBlock has tried to calculate the rental income of 200,000 properties and compared it with their indexed Cadastral Income. If the rental income is correlated with the indexed RC in 2023, the Cadastral Income is lower by a factor of 3 or 4.
- It's hard to say that CR corresponds exactly to rental income, just as it's hard to see a strong link with the comfort features often highlighted (presence of central heating, number of bathrooms, etc.).