We analyzed the distribution of Cadastral Income, which defines the Property Tax in Belgium. This article explains why property tax can be considered opaque and unequal, from a statistical point of view!
The calculation method
Cadastral income
The Cadastral Income (RC) constitutes the basis for the collection of the Property Tax (PI) and for the determination of property income taxable for personal income tax.
The RC is a notional 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 home.
This fictitious income was calculated by the General Administration of Heritage (AGDP, formerly the Land Registry) for the reference year 1975. Since then, it has not been updated: to overcome this problem, the RC is indexed annually. For 2024, the FPS Finances defined an indexation of 2.1763. In 2023, it was 2.0915.
What impact on the Property Tax?
The Property Tax (PI) is calculated as follows:
Property tax = indexed liability x global rate
Overall rate = regional rate + provincial rate + municipal rate (additional cents).
The regional rate is set by the region, the provincial rate by the province, and the municipal rate by the municipalities. In Brussels-Capital and Wallonia, the regional rate is 1.25%. In Flanders, this rate is 3.97%.
Thus, the higher the Cadastral Income (CI), the higher the property tax will be. Similarly, if the CI is incorrectly assessed (either downwards or upwards), then the Property Tax will also be.
What happens in the event of a reassessment of the RC?
Certain modifications to the property give rise to a revaluation of the RC. While this revaluation is rarely requested directly by the taxpayer, the revaluation is initiated by the administration (the AGDP) after having become aware of the modification through a third-party source (e.g., a building permit application).
Since it is not possible to reassess the rental value of the property in 1975, the AGDP mainly assesses the rental value based on points of comparison, for example in the same neighborhood. As such, the Property Tax is an opaque tax.
The real problem: the 1975 RC no longer corresponds to reality
The problem with the Cadastral Income lies in its updating: the indexation applied is global, that is to say that everyone sees their RC increase in the same way . And this without taking into account the evolution of the characteristics of each property or the attractiveness of their location.
Similarly, the image of potential rental income as calculated in 1975 no longer corresponds to the Belgian market in 2024 : certain districts and municipalities have seen their quality of life increase drastically. Very few municipalities have seen their Cadastral Income re-evaluated overall since that day. [1]
[1] “Revaluation of the cadastral income of dwellings after transformation ” , Report of the Court of Auditors transmitted to the House of Representatives, 2013.
Cadastral Income Inequalities in Brussels
We have seen that the Cadastral Income calculated in 1975 may no longer correspond to the state of the market. Some municipalities have seen their prices rise and others their prices stagnate: but all see their RC indexed in the same way.
SmartBlock has studied Cadastral Income in the Brussels Region:
The map seems to indicate that the highest RCs are in fact located around the richest municipalities, except for a few cases: Etterbeek, Molenbeek or Koelkeberg have either low or high RCs which do not correspond to the current market value.
Let’s now visualize the Cadastral Income, Property Tax and Price (€/m2) of each municipality:
The relationship between Cadastral Income and the price of real estate (apartments) then reveals disparities:
- Property tax is generally lower in Saint-Gilles than in Anderlecht (for the same type of property)
- The property tax paid is equivalent between Ixelles and 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 goods on its market.
- The additional centimes, which are determined by the municipality, do not compensate for this effect.
💡 Why this effect? The Property Tax is based on the Cadastral Income, calculated in 1975. Since 1975, some municipalities have seen their prices soar along with the quality of life: Etterbeek and Saint-Gilles are good examples. See: Price trends in Brussels-Capital .
The Cadastral Income Tax has not adapted to this development, and some municipalities that have not seen the value of their properties increase are paying the same tax rate as those whose prices have exploded as a result of the market.
…and more widely in Belgium
But this effect is not limited to the Brussels-Capital Region, since the RC indexation is identical everywhere. Thus, significant disparities are emerging between provinces and districts, as well as at the Kingdom 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 |
| Antwerp | 793 € | 345000 € | 0.23 |
| Cork | 684 € | 199000 € | 0.34 |
| Mons | 683 € | 195000 € | 0.35 |
| Bruges | 675 € | 329000 € | 0.21 |
| Gent | 552 € | 358000 € | 0.15 |
| Charleroi | 550 € | 169000 € | 0.33 |
Gent stands out significantly from the other municipalities due to its very low average RC compared to high prices (in the top 3) for 3-bedroom houses. Antwerp and Bruges follow for the same reasons.
Apartment type (2 bedrooms)
| Median cadastral income | Median selling price | ratio | |
|---|---|---|---|
| Brussels-Capital | 1.243 € | 294.000 € | 0.42 |
| Namur | 1.086 € | 219.000 € | 0.50 |
| Cork | 981 € | 179.000 € | 0.55 |
| Mons | 975 € | 160.000 € | 0.61 |
| Charleroi | 941 € | 129.000 € | 0.73 |
| Gent | 902 € | 310.000 € | 0.29 |
| Antwerp | 870 € | 229.000 € | 0.38 |
| Bruges | 862 € | 269.000 € | 0.32 |
It is already remarkable that the median RC of a 2-bedroom apartment are similar to the RC of 3-bedroom houses (while the surface area is not the same: respectively ~90m2 and ~140m2).
Therefore, the ratio between RC and property value is very high. It is in Charleroi and Mons that it is very high in proportion to the median sale price of this type of apartment. Again, the three Flemish cities report a very low RC compared to property prices.
💡 What's the interpretation? For an identical property, the Cadastral Income is not necessarily correlated with real estate prices (nor with the rental market, which is also correlated with market value). Global indexation does not correct this phenomenon.
Again, the relationship between RC and Market Value highlights the disparities:
- The province of Liège has the highest median Cadastral Income in relation to the market values of real estate (houses and apartments).
- Cadastral income is highest in Brussels-Capital and Flanders. However, the Flemish have a particularly low cadastral income relative to the market value of their property.
- The difference between Flanders and Wallonia is marked, and it is generally in West Flanders and East Flanders that this ratio is most advantageous.
Conclusion
- The Property Tax is based on the Cadastral Income, a fictitious income established for 1975 and which has not been revised since.
- The evolution of the real estate market has increased the value of properties in certain municipalities without the Cadastral Income being adjusted accordingly.
- There are disparities between neighborhoods and municipalities: for a similar property, the RC is identical in municipalities which have a very different real estate market (purchase price, rental market).
- Therefore, owners of properties with a high market value pay a similar property tax as those in less favoured areas.
- Revisions to the Cadastral Income Tax are made infrequently when major changes are made to a property. It is then possible to file a claim if the new RC is inadequate, but it is best 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 for certain municipalities in 2023 (e.g. Forest, Schaerbeek). It is important to put into perspective the fact that the municipal additional centimes represent a generally small part in the calculation of the rate applied to the RC. It is indeed the difference in Cadastral Income between municipalities which drive the differences in IP between municipalities. Example:
- Schaerbeek: 4191 additional cents → Median PI 290€
- Woluwe-Saint-Pierre: 1725 additional cents → Median PI of €451
- On the other hand, the increase in the indexation of Cadastral Income from 1.9084 (2022) to 2.0915 (2023) has a real direct impact on the property tax, since it is this value which serves as a base multiplied by the regional/provincial/municipal rate.
- Calculating Cadastral Income is not easy: SmartBlock has tried to calculate the rental income of 200,000 properties and compared it with their indexed Cadastral Income.
- If rental income is correlated to the RC indexed in 2023, the Cadastral Income is lower by a factor of 3 or 4.
- It is difficult to say that the RC corresponds exactly to rental income, just as it is difficult to see a strong link with comfort characteristics that are often highlighted (presence of central heating, number of bathrooms, etc.).