As part of succession planning, it is usually interesting to buy a second residence in the children's name. This can be a split purchase (usufruct - bare ownership), but also be a co-ownership or even a full ownership.
Since 1 July 2018, the rate of Flemish registration fees (currently the sales law) from 10% reduced to 7% for the purchase of the family home. However, a purchase abroad in the children's name may impact the registration fee payable.
A practical example
Suppose you wish to buy a second residence in Spain. To avoid inheritance tax later, you consider buying this Spanish home in the children's name. However, your children are still living at home, living in digs during their studies, or renting temporarily. So they do not yet own any property.
If your children wish to buy a home of their own, they will be eligible for the reduced registration fee of 6%. Indeed, if your children purchase a home in Flanders for the entirety of full ownership in order to establish their main residence there, they will be entitled to this reduced rate.
Why donate foreign property first?
Conditions for the reduced rate
The first condition is that your child buys the property to establish his or her main residence there. The buyer must register in the population register within two years of deed.
An important condition is that on the date of the purchase deed, your children should not already be full owners of another property or building land, regardless of its location. This means that your child may not own 100% of full ownership of a property, even if it is foreign property.
This arrangement may interfere with inheritance planning. If your child wishes to take advantage of the reduced registration duty when purchasing their first own home in Belgium, they must not own full ownership of your second residence abroad.
You can then wait to buy until your children are already settled or appeal for an alternative.
Alternatives
Other constructions are certainly possible. Consider co-ownership or split purchase. In principle, these constructions do not prevent the right to the reduced registration fee.
Read more about succession planning when buying a second residence.
