Materialise your property projects

Transcription

1 Materialise your property projects All you need to know about mortgage loans. ing.be/home 2015 Mortgage loan 1

2 Introduction 3 Mortgage loans in concrete terms 4 The various forms of mortgage loans 5 Interest rate variability packages 5 Fixed interest rate packages 5 Variable interest rate packages 5 Repayment method packages 7 Fixed monthly repayment mortgage loans 7 Fixed capital repayment mortgage loans 8 Specific packages 8 Bullet loans: mortgage loans without interim capital repayments 8 Bridge loans 8 Collateral: your loan guarantees 9 The charges 10 Dossier fees 10 Survey charges 10 Deed of purchase charges 10 Charges for a mortgage deed or notarised mandate 10 Re-investment penalty 10 Insurance 11 Outstanding balance insurance 11 Fire insurance 11 Mortgage loan taxation 12 Foreword 12 Regional tax benefits: home bonus 12 Definition: own and only home 12 Home in the European Economic Area 13 What are the tax advantages? 13 Conditions relating to the loan contract 16 Conditions relating to the outstanding balance insurance contract 16 Regional tax benefits: long-term savings tax reduction 17 Conditions relating to the loan contract 17 Conditions relating to the outstanding balance insurance contract 17 Regional tax benefits: tax reduction for interest 17 Non-only home: federal authority 18 Federal tax benefits: long-term savings tax reduction 18 Conditions relating to the loan contract 18 Conditions relating to the outstanding balance insurance contract 18 Federal tax benefits: ordinary interest deduction 18 Buying a home or a plot of land, building a house or a flat often requires substantial sums of money... Before taking such a step, you need to thoroughly prepare your project and to gather all necessary information. ING is happy to help you to realise your project. This brochure contains the answers to most of your questions on this subject. It details the numerous loan packages available, as well as the various possibilities we have developed. Here you will also find information on the collateral and charges linked to mortgage loans, not to mention an extensive chapter on mortgage loan taxation, an admittedly complex matter yet with a certain impact on your budget. For advice, further information or a personalised simulation please do not hesitate to contact an ING adviser or surf to ing.be/home. Practical info Mortgage loan Mortgage loan 3

3 Mortgage loans in concrete terms Before delving into details, let us first answer some general questions. Who can take out a mortgage loan? Any private individual usually domiciled in Belgium when the deed is signed and who is acting mainly outside his professional activity. Under certain conditions ING can also grant mortgage loans to non-residents, in other words individuals who do not usually reside in Belgium. What is the purpose of a mortgage loan? A mortgage loan provides the funds required to buy a plot of land, or to acquire, build or renovate a property. It can also be used to repay an existing mortgage loan or to fund inheritance duties, donation duties, registration fees, devolution fees and other taxes relating to one or several properties. How much can you borrow? The maximum amount you can borrow depends firstly on your project and secondly on your repayment capacity. Over how many years can the loan repayments be spread? The length of a mortgage loan can range up to 30 years, according to your needs and the package you choose. Yet the longer the term, the higher the total cost of the loan. How is the amount of the loan made available to you? When you buy a home, ING will release the total loan amount once the deed has been signed. If you are building or altering a property, ING will make the loan amount available through minimum instalments of 2,500 euros, as and when the works progress, on the basis of invoices and/or supporting documents. The advantage is that you will only pay interest on the capital you have actually drawn down. As from the seventh month of the construction period, you will pay an availability indemnity on the amounts you have not drawn down. The latter indemnity amounts to 1.75% per annum between the 7 th and the 12 th month and then rises to 2% a year as from the 13 th month. Pre-contractual information in accordance with the European Code of Conduct ING respects the European Code of Conduct for mortgage loans. This ensures that you will receive transparent and easily comparable information from us. The various forms of mortgage loans The various forms of mortgage loans available from ING are summarised below. They are categorised according to, firstly, interest rate variability and, secondly, the repayment method. We also offer several specific packages to help you to optimise your project. Interest rate variability packages Fixed interest rate formula packages Throughout the entire duration of the loan the interest rate will not change. Consequently you will never be confronted by any unpleasant surprises. With this formula you opt for absolute certainty! Variable interest rate packages In addition to the fixed interest rate ING also offers formulas with variable interest rates. With such packages, both the interest rate variability period and the maximum interest rate fluctuations are important. The review period determines after which period the rate can change. In concrete terms, you can choose from the following formulas: Annual variability mortgage loans (1+1+1): the rate can be adjusted every year. This option has a maximum interest rate variation from +3% to unlimited (minimum 0%). Five-yearly variability mortgage loans ( ): the rate can be adjusted once every five years. The maximum interest rate fluctuation amounts to 5% (minimum 0%). A mortgage loan with initial variability after 10 years and five-yearly variability thereafter (10+5+5). This option has a maximum interest rate variation from 5% or +2% to unlimited (minimum 0%) Mortgage loan Mortgage loan 5

4 The maximum interest rate fluctuations determine the a maximum interest rate and a minimum interest rate maximum deviation, both upward and downward, in per contract which is set for the entire duration of relation to the starting interest rate. As a result you the loan and which may not be exceeded during the are protected against sharp rises in interest rates. The lifetime of the loan. fluctuations are expressed as annual percentages. Together with the initial interest rate they determine Example when the interest rate is reviewed at You opt for an annual review (1+1+1) the end of the second year, a maximum with maximum interest rate variations of fluctuation of 0.165% (2% a year) +3/-unlimited. If the mortgage loan is repaid will apply against the starting rate. through monthly payments, such maximum Consequently, the third year your interest variations will be translated in the loan rate can rise to a maximum of 0.456% contract as %/-unlimited (min. 0%). (5.61% a year) The interest rate will amount to 0.291% a when the interest rate is reviewed at the month (3.55% a year). Consequently your end of the third year, the contractual interest rate will never be higher than maximum fluctuation of 0.247% (3% 0.538% a month (6.65% a year). The annual a year) will apply against the starting review formula incorporates an additional rate. From the fourth year and until your security for the first three years. contract matures, your interest rate can amount to a maximum of 0.538% (6.65% a the first year it is the agreed interest rate which applies, i.e % (3.55% a year) year). Example Repayment method packages when the interest rate is reviewed at With this formula the interest rate can drop You opt for a mortgage loan with an the end of the first year, a maximum indefinitely. This means that each time the annual review and a duration of 20 years: Fixed monthly repayment mortgage loans fluctuation of 0.083% (1% a year) will interest rate is reviewed and the market is on Monthly interest rate = 0.291% (3.55% a Each month you pay ING the same amount, consisting apply. Consequently, the second year your a downward trend, the interest rate can be year) partly of interest and partly of capital. The portion interest rate can rise to a maximum of downgraded indefinitely. The interest rate Maximum monthly interest rate variation of interest shrinks over time, the portion of capital 0.374% (4.58% a year) cannot, however, be negative. = 0.247% (valid as from the third interest increases over time. The amount repaid remains the rate review) same throughout the entire lifetime of the loan or Initial reference index = (a month) until the contractual interest-rate review. The periodical interest rate review your mortgage deed. The new reference index will be Reference index valid for the third If you opt for a variable interest rate, then the interest that published in the Belgian Official Gazette in the interest rate review = (a month) Example rate of your mortgage loan will be adjusted according calendar month before the date of the interest rate Calculation of review formula = 0.291% + Mortgage loan of 100,000 repayable to: review. ( ) = 0.567% a month (7.02% over 20 years at a fixed interest rate of The period of variability you chose a year) 0.431% a month (5.30% a year) through The maximum interest rate fluctuations ING uses the reference index A for the annual Given the maximum interest rate fixed monthly repayments. The monthly The trend in the statutory reference index. reviews and the reference index E for the five-yearly variation, this interest rate will not be instalment, valid throughout the lifetime of and the review. These reference indexes applied but limited to 0.538% a month the loan, amounts to The following formula is applied for that purpose: are determined by law; they are based on the (6.65% a year). The first monthly instalment consists of New interest rate = starting interest rate + (new reference index initial reference index). government debt and are communicated by the government. An adjustment is only possible if the application of the above formula entails a rise or 431 in interest and in capital. The second monthly instalment consists of in interest and in a drop of a minimum of 0.05% a year against the capital. The initial reference index which is applied to the previous interest rate. variable interest rate you chose is indicated in the list of charges at the time of your application and in 2015 Mortgage loan Mortgage loan 7

5 Fixed capital repayment mortgage loans The capital repayments are constant - each month you repay the same amount of capital throughout the entire period of the loan. The interest will be calculated on the outstanding balance ( debt balance ) and is therefore degressive. You will repay far more at the start of the loan and less as times goes by. Example A mortgage loan of 100,000 repayable over 5 years at a fixed interest rate of 0.403% a month (4.95% a year) according to the "Bullet" formula. For 5 years you will pay a fixed amount of interest of 403 euros a month. The full amount of the loan (100,000 euros) will be repaid in one go at the end maturity. Example Mortgage loan of 100,000 repayable over 20 years at a fixed interest rate of 0.431% a month (5.30% a year) through fixed capital repayments. Each month you will repay a fixed amount in capital of The first monthly instalment consists of , with 431 in interest and in capital. The second monthly instalment consists of , with in interest and in capital. Specific packages Bullet loans: mortgage loans without interim capital repayments In specific cases ING grants mortgage loans without interim capital repayments for periods of up to 20 years. With Bullet loans you only pay interest during the lifetime of the loan. You will repay the full amount of capital in one go at maturity. You can match the maturity date with the payment of a life insurance policy or a group insurance contract for instance. Such loans are available with the following variability options: 1 + 1, and a fixed rate. A Bullet loan can be combined with a conventional mortgage loan. Bridge loans Say you want to buy or build a home and would like to - partly or totally fund it with the proceeds from the sale of another property. Unfortunately you do not know the precise date of the sale, yet you do need the funds to buy or build your new home. In concrete terms you determine the term of the loan (generally 6 or 12 months). On the date the property is actually sold you repay the loan in one go. As such dates are imprecise, no reinvestment penalty is charged in the event of early repayment. The interest rate for an ING Bridge Loan is set for the entire lifetime of the loan. Example A mortgage loan of 100,000 euros repayable over 12 years at an interest rate of 0.477% a month (5.50% a year) through a bridge loan. For 12 months you will pay a fixed amount of interest of 447 euros a month. The total capital must be repaid in one go after 12 months, but you will not pay a reinvestment penalty if you repay the loan early. Collateral: your loan guarantees Mortgage loans inevitably entail one of the securities stipulated by the law on mortgage loans: a mortgage, a notary public mandate or an undertaking to grant a mortgage. Generally the collateral will be taken on the property which is the subject of the mortgage loan; however it can be taken on any other property located in Belgium. It is possible to combine such collateral. Everything depends on the elements of your file. The value of the property Obviously an important element in your file is the value of the property which will serve as collateral for your mortgage loan. The market value 1 of the property is assessed by one of the real estate experts with whom ING works. In some cases the pre sale agreement or other documents can suffice to establish the value of the property. Opening of a mortgage loan If your loan is (partly) covered by a mortgage, ING grants loans for the purpose of taking over a mortgage loan opening. The ensuing mortgage registration is valid for 30 years. This means that the capital you have repaid at a given time can, subject to ING's approval, be used again for a new loan without any supplementary notary charges 2. 1 The value of property on the free market. 2 Renewal charges are owed in some situations Mortgage loan Mortgage loan 9

6 The charges Insurance The charges linked to the conclusion of a mortgage loan depend on various parameters. The types of charges are summarised below. Your ING branch can help you to estimate the actual cost price. To purchase or build a property is a major project requiring the best possible safeguards. To that end two essential insurance packages are available to provide you with peace of mind: outstanding balance insurance and fire insurance. Dossier fees The processing of a mortgage loan application entails certain costs. Such costs are only due once you have received an official loan offer from us. In some cases a change to your file may also incur additional dossier fees. Please read the list of charges for an overview. Survey charges A survey by an ING-approved independent surveyor is an estimate of the value of the properly you are buying, (re)building or on which collateral is taken. It is based on several elements (surface area, location, number of rooms, etc.). It is undoubtedly a useful document in which you receive the advice of a professional about the worth of the property. If a survey is made you will pay the surveyor directly. Naturally you will receive a copy of the survey. A survey is not always required: in many cases the presale agreement or other documents can suffice to establish the value of a property. In some cases a mortgage serving as collateral for the mortgage loan can be totally or partially replaced y a mandate to grant a mortgage (a notary mandate). Re-investment penalty You can repay the loan in full or in part at any time. If the amount repaid is lower than 10% of the capital, such repayment is only allowed once per calender year. In the event of early repayment, you must pay a re-investment penalty which corresponds to three months interest on the capital amount you repay. The re-investment penalty is not charged in the case of early repayment: through an outstanding balance insurance following the death of the credited party an ING Bridge Loan. Outstanding balance insurance ING Outstanding Balance insurance safeguards your next of kin from the bother of repaying your mortgage loan if you were to die. For the utmost security, ING recommends that you take out full cover for each borrower. In that way, in the event of death, the loan repayment will always be fully covered. The premium will be calculated on the basis of the insured capital, the term of the contract, smoking behaviour and the actuarial age of the insured on the simulation date. The final premiums, which are determined once the insured's state of health has been assessed and after financial acceptance, are confirmed in the contract. Under certain conditions, people with a higher health risk can benefit from a concession on the outstanding balance insurance premiums. Consult your insurer, your bank or your advisor for further information. The insurer is free to chose the beneficiary. Nonetheless, in some cases the choice of beneficiary can influence a possible tax break on the premium (in this regard please refer to the chapter on mortgage loan taxation). Registered office: avenue Marnix 24, B-1000 Brussels Brussels RPM/RPR VAT BE BIC: BBRUBEBB IBAN: BE Insurer ING Life Belgium SA/nv, an insurance company approved under the code number Registered office: cours Saint-Michel 70, B-1040 Brussels Brussels RPM/RPR VAT BE BBRUBEBB IBAN: BE Fire insurance Fire insurance covers possible damage to your property in the event of a fire, flooding, a break-in, natural disaster, etc. Although it is not obligatory, such insurance is more than recommended for any home-owner. ING wants to protect you at best and therefore offers Home and Family Blanket insurance. In addition to the basic cover, you can choose from a broad raft of extra options (theft and vandalism, family civil liability, vehicles not in use) which you can take out according to your situation and specific needs. In the event of a claim, you can always rely on fast and efficient help from ING Home Assistance, via ING Assist'Line (02/ ) which is accessible 24/7, 365 days a year. Deed of purchase charges The purchase costs include in particular the notary costs linked to the purchase, the registration fees of the deed of purchase or V.A.T. if the property you are purchasing is new. Tip: For new constructions and recent buildings, ING grants a special discount of 55% the first year and 15% the following five years on the building premium. Tip: by taking out ING insurance together with your mortgage loan you can benefit from a lower interest rate under certain conditions. You can read the precise conditions in the charges for mortgage loans. Charges for a mortgage deed or notarised mandate The costs of a deed with a mortgage registration include the fees for the registration of the mortgage, the mortgage fees and the fees of the notary. They vary in particular according to the amount of the mortgage. insurance policy of ING Life Belgium SA/nv with a single premium or risk premium (Premiums paid to cover the risk of death for one year. Such premiums vary from one year to another). The capital insured decreases or remains constant according to the mortgage loan. The premium tax on each premium paid in amounts to: 1.1% if the insured capital is degressive, 2% if the capital insured is constant. For further information please consult your ING branch. ING Outstanding Balance insurance is offered by: Insurance agent ING Belgium SA/nv, an insurance broker registered with the FSMA under the code number 12381A. ING Home and Family Blanket Insurance is provided by: Insurance agent ING Belgium SA/nv, an insurance broker registered with the FSMA under the code number 12381A. Registered office: avenue Marnix 24, B-1000 Brussels Brussels RPM/RPR VAT BE BIC: BBRUBEBB IBAN: BE Insurers ING Life Belgium SA/nv, an insurance company approved under the code number Registered office: cours Saint-Michel 70, B-1040 Brussels Brussels RPM/RPR VAT BE BIC: BBRUBEBB IBAN: BE Allianz Belgium SA/nv, an insurance company approved by the authorities under the n 0097 to provide "Life" and "Non-Life" insurance. Registered office: rue de Laeken 35, B-1000 Brussels Brussels RPM/RPR VAT: BE Phone: Fax BIC: BBRUBEBB IBAN: BE Mortgage loan Mortgage loan 11

7 Mortgage loan taxation Foreword This brochure is based on current legislation as at the begining of In addition this brochure deals exclusively with the tax regulations applicable to loans. Funding the purchase, building or renovation of a property through a mortgage loan generally entails tax savings which considerably reduce the total spending cost. Such tax savings can relate to both the interest paid on the loan and to the capital repayments, as well as the outstanding balance insurance premiums 1. Since 1 January 2015 the three Regions are competent for the tax incentives of housing taxation. What does this imply? The Flemish, Walloon, and Brussels Capital Regions are exclusively competent for the tax benefits for the expenses to acquire or maintain an own home. In other words that is the home you may, through inheritance, jointly own, or own in bare ownership or as a usufruct and live in yourself. Henceforth the Regions can determine the tax rules for own home benefits independently from each other. The federal authorities remain competent for the tax benefits relating to not-own homes. Own home: Regional competence The Region in which your 'fiscal place of residence' is located on 1 January of the tax year is competent for the taxation of your own home. The fiscal place of residence is the place where you work and live permanently. Such place can differ from the place where you are registered with the municipal authorities. For married couples or legal cohabitants who are taxed jointly, the fiscal place of residence is the place where the family is established. For the year of actual separation (the year in which taxation is still joint) the family is still deemed to reside in the Region where the last matrimonial place of residence was established. One single fiscal place of residence can be determined per tax year. Regional tax benefits: home bonus When you take out a loan to acquire or preserve an own and only home, under certain conditions, such loan can be taken into consideration for the Regional 'home bonus' tax reduction. The tax benefit of the home bonus is allocated as a tax reduction at a fixed percentage, determined by the Regions. Definition of "own and only" home Only home: A taxpayer is deemed to have an only home if he/ she only owns one home as at 31 December of the year the loan contract is concluded nor may he or she have other housing, through inheritance, jointly owned, or owned in bare ownership or as a usufruct. Account is not taken of: other housing you may, through inheritance, jointly own (and not 100% own), or own in bare ownership or as a usufruct, Other housing you own and which is for sale on the property market as at 31 December of the year the loan contract is concluded and is actually sold by the latest on 31 December of the following year, property which is not characterised as a home, e.g. building land, a garage, student accommodation and business premises. Did you know that it is the credited party who is responsible for proving that the home is for sale? Proof can be provided if you have called on a real estate agent (who has actually put the home up for sale), placed an advertisement, etc. Own home: An own home is the home in which you live as the owner, occupier, (joint) heir or as usufruct during the taxable period. Such an own home does not include: the portion of the home which is used for professional purposes by the taxpayer or a family member (a part of) the home lived in by people who are not family members of the taxpayer. Whether a home is an only home is determined on a daily basis. If you have taken out a loan to fund the home, then it is the moment when the capital repayments, the interest and individual life insurance premiums are paid that is taken into consideration to check whether or not it is an own home. Nonetheless a home you do not actually live in yourself can be your 'fiscal residence'. Moreover, it will be considered that your home is your own home if you do not actually live in it for the following reasons: For professional or social reasons, Due to legal or contractual constraints which make it impossible to live in the home. For instance, a new home is not occupied immediately because it is inhabited by the tenant 1 Under certain conditions. during a transitional period. Or: the previous owner sold the home on the condition he could continue to occupy it during a transitional period. due to insufficient progress of construction or renovation works you are unable to actually live in your home. To satisfy this condition, you can use the following criteria as proof of the start of works: the date on which an application to execute the aforementioned works, the date on which an agreement was signed with a builder, building firm, architect, etc. to implement or supervise the works, the date on which the required building materials were ordered. If you invoke this last reason, you must actually live in the home as at 31 December of the second year following the year the loan contract is concluded. Otherwise, the taxpayer can only benefit from the regional tax reduction for long-term savings and in the Flemish region for the ordinary interest deduction (see below). The loss of the home bonus is final except where the legal or contractual obstacles are still valid or due to insufficient progress of construction or renovation works you are unable to actually live in your home. In such cases a return to the 'own and only home' system is possible provided you move into the home in the year the obstacles are removed or the works are completed. Home in the European Economic Area The home financed must be located in the European Economic Area. The 28 Member States of the European Union belong to the European Economic Area: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungry, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom, plus Iceland, Liechtenstein and Norway. What are the tax advantages? Tax benefits are granted for the loan expenses of interest actually paid, capital repayments and 2015 Mortgage loan Mortgage loan 13

8 A basic amount of 2,290 euros first taxable period during which the taxpayer An increase of 760 euros per taxpayer, during the becomes the owner, long-term lessor, superficial first ten taxable periods as from the year the loan owner or beneficial owner of a second home. The contract is concluded. The amount of 760 euros is taxpayer s situation is re-examined for this purpose increased by 80 euros if the taxpayer has at least on 31 December of each taxable period. The loss three dependent children during the year following of the right to increases is final, even if during the year the loan is concluded. The increase for these ten first years the taxpayer transfers the dependent children is valid for the period during ownership or beneficial ownership of the second which the 760-euro increase is applied. The home. aforementioned increases no longer apply for the first taxable period during which the taxpayer The final tax advantage is calculated at a one-off rate becomes the owner, long-term lessor, superficial of 40%. owner or beneficial owner of a second home. The taxpayer s situation is re-examined for this purpose The basic amounts and increases are indexed. on 31 December of each taxable period. The loss of the right to increases is final, even if during The maximum tax benefit per taxpayer who takes out these ten first years the taxpayer transfers the a loan is calculated as follows: ownership or beneficial ownership of the second home. (2, ) x 40% = 1,252 euros The final tax advantage is calculated at a one-off rate of 45%. The basic amounts and increases are indexed. What happens if the capital repayments suffice in themselves to fill the basket? individual life insurance premiums covering the loan owner of a second home. The taxpayer s collateral exclusively. situation is re-examined for this purpose on The maximum tax benefit per taxpayer who takes out The law does not stipulate any order of allocation 31 December of each taxable period. The loss a loan is calculated as follows: between the interest, the capital repayments Flemish Region of the right to increases is final, even if during and outstanding balance insurance premiums. The Flemish Region allows the following fiscal residence benefits: these ten first years the taxpayer transfers the ownership or beneficial ownership of the (2, ) x 45% = 1, euros In principle, if the three types of expenses are indicated in the tax return, the three will be second home. allocated evenly. The maximum basket for the application of the tax Walloon Region reduction amounts to 2,360 euros (2016 tax year, The actual tax advantage is calculated at a one-off The maximum basket for the application of the tax Consequently, if the maximum deductible 2015 income) per taxpayer and breaks down as rate of 40%. reduction amounts to 3,130 euros (2016 tax year, amount is attained with the capital repayments follows: 2015 income) per taxpayer and breaks down as and the interest, preferably the taxpayer ought The basic amounts and increases are no longer follows: never to indicate his/her outstanding balance A basic amount of 1,520 euros indexed. (For the Walloon Region the same basic amounts and insurance premiums in his/her tax return, thereby An increase of 760 euros per taxpayer, during increases apply as for the Brussels Region. The basic avoiding taxation of the capital paid in the event the first ten taxable periods as from the year the The maximum tax benefit per taxpayer who takes out rate to calculate the tax advantage is 40%.) of death. loan contract is concluded. The amount of 760 a loan is calculated as follows: A basic amount of 2,290 euros euros is increased by 80 euros if the taxpayer An increase of 760 euros per taxpayer, during the Interest on loans taken out for own and only has at least three dependent children during the year following the year the loan is concluded. (1, ) x 40% = 944 euros first ten taxable periods as from the year the loan contract is concluded. The amount of 760 euros is homes and for which the home bonus applies, can only be entered under the home bonus and The increase for dependent children is valid for increased by 80 euros if the taxpayer has at least can no longer be taken into consideration for the the period during which the 760-euro increase Brussels Capital Region three dependent children during the year following ordinary tax reduction for interest. is applied. The aforementioned increases no The maximum basket for the application of the tax the year the loan is concluded. The increase for longer apply for the first taxable period during reduction amounts to 3,130 euros (2016 tax year, dependent children is valid for the period during which the taxpayer becomes the owner, long income) per taxpayer and breaks down as which the 760-euro increase is applied. The term lessor, superficial owner or beneficial follows: aforementioned increases no longer apply for the 2015 Mortgage loan Mortgage loan 15

9 Caution: If you take out a new loan for your own and only home and you are still bound by a loan concluded before 1 January 2015 for which you benefit from a tax break, you will need to pay special attention to the possibility offered to you by the law of choosing and/or combining the way you are taxed in relation to the relevant tax system. Can both partners benefit from the home bonus? A loan taken out prior to a marriage or the statement of legal cohabitation by one partner for his own and only home where such single owner (occupier, long-term lessor, beneficial owner or usufruct), is the only owner, does not entitle the other partner to the "only home deduction" even where he also repays the loan. Nevertheless the authorities allow the deduction of the loan expenses for the other spouse or legally cohabiting partner in the event: 1. he or she is liable for the cadastral income (e.g. following the legal marriage settlement where the home is part of the joint property, or in the event of divorce with a clause of joint assets), and; 2. the other partner is included in the loan contract as the joint credited party. Discretionary distribution between spouses or legal cohabitants Where a joint tax return is filed and both spouses or legal cohabitants are credited parties and are entitled to the home bonus, the spouses or cohabitants are free to split the expenses linked to the loan (capital repayments and interest), as well as the life insurance premiums (with the limits) between themselves, irrespective of each of their shares in the joint assets. De facto cohabitants, who each file their tax return separately, may not apply such discretionary distribution as it is done for them in relation to their respective assets. The discretionary distribution does not apply in the first year of the wedding or legal cohabitation. During that year the partners are indeed still taxed separately. Conditions relating to the loan contract A loan with a minimum duration of ten years must be secured by a mortgage registration (a mandate will not suffice). If your loan is partly secured by a mortgage, only such part will benefit from the aforementioned tax advantages. The mortgage loan must be taken out specifically to acquire or preserve an own and only home. This refers to: 1. The purchasing of a home including registration fees or V.A.T. 2. The building of a home 3. Total or partial renovation of a home 4. The payment of inheritance duties relating to a home. 5. The payment of donation duties relating to a home. Conversely, loans used to fund the purchase of land are not covered by these provisions, as their purpose is not to acquire a home, unless the land loan is taken out at the same time as a loan aimed at (partly) financing the building of a home. Conditions relating to the outstanding balance insurance contract The contract must be concluded before the age of 65. The contract must cover his/her own life exclusively. The taxpayer = the policyholder = the insured. The amount insured is lower than or equal to the amount of the mortgage loan taken into consideration for the home bonus (and for which a mortgage registration has been taken therefore neither a mandate nor an undertaking) The advantages stipulated by the insurance contract must be indicated as follows: - up to the amount serving to reconstitute or secure the loan, the contract is in favour of persons who, in the event of the death of the insured, acquire full ownership or beneficial ownership of the property - for any balance, the contract is to the benefit of the spouse, legal partner or parents up to the second degree of the taxpayer (children, grandchildren, parents, grandparents, brothers and sisters). Regional tax benefits: long-term savings tax reduction The capital repayments of mortgage loans and life insurance premiums paid for loans relating to the not only 1 but own 2 home, give right to the regional tax reduction for long-term savings. Irrespective of the loan date, the reduction amounts to 30% of the expense, provided the region does not change the rate. The tax reduction is calculated as follows: [Capital repayments + outstanding balance insurance premiums] x 30% (single tax reduction) The fiscal limits of the tax reduction for long-term savings in the Flemish Region are no longer indexed and for the 2016 tax year (2015 income) will remain at the level of the 2015 tax year (2014 income). The fiscal limits for the tax reduction for long-term savings are still indexed in the Walloon and Brussels Capital Regions. Only the capital repayments relating to the first 76,110 euros (Flemish Region) or 76,360 (Brussels and Walloon Regions) of the initial amount of the loan give right to the tax advantage. Furthermore, for each spouse, the total capital repayments taken into consideration for the tax reduction and the outstanding balance insurance premiums may not exceed 15% of the first amount of 1,900 euros (Flemish Region) or 1,910 (Brussels and Walloon Regions) of professional income and 6% of the surplus, with an absolute maximum of 2,280 euros (Flemish Region) and 2,290 euros (Brussels and Walloon Regions). In addition, this amount will be reduced by any amount the customer might deduct from another loan under the own and only home taxation. The maximum tax benefit per taxpayer who takes out a loan is calculated as follows: For the Flemish Region: 2,280 x 30% = 684 euros For the Brussels and Walloon Regions: 2,290 x 30% = 687 euros Conditions relating to the loan contract The loan must be taken out by the actual taxpayer from an institution established in the European Economic Area. The mortgage loan must be secured by a mortgage registration. The mortgage loan must have a minimum duration of 10 years. The purpose of the loan must be to build, acquire or renovate a home located in Belgium or in another European Union country. Conditions relating to the outstanding balance insurance contract The contract must be concluded before the age of 65. The contract must cover his/her own life exclusively. The taxpayer = the policyholder = the insured. When the contract stipulates advantages in the event of life, it must have a minimum duration of 10 years. The advantages stipulated by the insurance contract must be indicated as follows: - up to the amount serving to reconstitute or secure the loan, the contract is in favour of persons who, in the event of the death of the insured, acquire full ownership or beneficial ownership of the property - for any balance, the contract is to the benefit of the spouse, legal partner or parents up to the second degree of the taxpayer (children, grandchildren, parents, grandparents, brothers and sisters). The right to deduction remains valid where such insurance is secured by a mortgage lender, i.e. ING. Regional tax benefits: tax reduction for interest The interest paid on loans relating to the non-only 3 but own 4 home give right to the regional interest tax reduction. The Special Finance law no longer stipulates the ordinary interest tax deduction for loans taken out as from 1 January Consequently the Federal authority has left the decision to allow such interest as a tax benefit up to the Regions. At the present time, only the Flemish Region has allowed the interest on 1 To be assessed on 31 December of the year during which the loan is concluded. 2 To be assessed when the capital repayments and insurance premiums are made Mortgage loan 16 3 To be assessed on 31 December of the year during which the loan is concluded. 4 To be assessed when the interest is paid Mortgage loan 17

10 such loans taken out as from 1 January 2015 at the 40% tax reduction rate. Both the Walloon and the Brussels Regions only allow the interest deduction for loans taken out before 1 January Non-only home: federal authority Expenses relating to the acquisition or preservation of a property abroad, rental property or other properties which are not of a housing nature (land, business premises without housing, etc.) remain a purely federal competence. Federal tax benefits: long-term savings tax reduction The federal tax reduction for long-term savings applies to capital repayments on mortgage loans and life insurance premiums relating to non-only 1 and non-own 2 homes. The reduction amounts to 30%, irrespective of the date on which the contract was concluded. The fiscal limits of the tax reduction for long-term savings will no longer be indexed as from the 2015 tax year (2014 income) until the 2018 tax year (2017 income). Initial amount of 75,270 euros 15% of the initial amount of 1,880 euros of the net taxable income and 6% of the surplus, with an absolute maximum of 2,260 euros 2,260 euros x 30% = 678 euros Conditions relating to the loan contract The loan must be taken out by the actual taxpayer from an institution established in the European Union. The mortgage loan must be secured by a mortgage registration. The mortgage loan must have a minimum duration of 10 years. The purpose of the loan must be to build, acquire or renovate a home located in Belgium or in another European Union country. The contract must cover his/her own life exclusively. The taxpayer = the policyholder = the insured. When the contract stipulates advantages in the event of life, it must have a minimum duration of 10 years. The advantages stipulated in the insurance contract must be established as follows: - up to the amount serving to reconstitute or secure the loan, the contract is in favour of persons who, in the event of the death of the insured, acquire full ownership or beneficial ownership of the property; for any balance, the contract is to the benefit of the spouse, legal partner or relatives up to the second degree of the taxpayer (children, grandchildren, parents, grandparents, brothers and sisters). The right to the reduction remains acquired when such insurance is given as by a mortgage lender, i.e. ING. Observation: as from 2015 the tax reduction for long-term savings is at both a regional and a federal level. To avoid a doubling of the amount of capital repayments on mortgage loans and life insurance premiums with regard to a given taxpayer, the maximum amount for both deductions applies and the basket will be first filled with the expenses which come into consideration for the regional tax reduction. Federal tax benefits: ordinary interest deduction The federal ordinary interest deduction is maintained and will not be converted into a tax reduction. Interest on debts the taxpayer specifically entered into to acquire or preserve other real estate property than the own home (non-only 3 and non-own 4 home) give right to the (federal) ordinary interest deduction. Interest is deducted from the taxable immovable income. Cadastral income from the own home is not part of such income as the own home is tax exempt. Conditions relating to the outstanding balance insurance contract The contract must be concluded before the age of To be assessed on 31 December of the year during which the loan is concluded. 2 To be assessed when the capital repayments and insurance premiums are made. 3 To be assessed on 31 December of the year during which the loan is concluded. 4 To be assessed when the interest is paid Mortgage loan Mortgage loan 19

11 Practical info Are you interested? This is what you must do to make your dream come true: Take your project to the ING branch of your choice where you will be advised on the best packages for your loan according to your project, your situation and your expectations, Our branches are equipped with tools which can compile loan estimates and give you a file with the data from the simulation made, in accordance with the European Code of Conduct. If one of the simulations suits you, you can file an official loan application. In most cases the decision relating to your application can be taken by the ING branch. If an agreement is reached with regard to your loan application, we will give you an offer confirming all the features and terms of your mortgage loan, together with a repayment schedule and a draft deed. You sign such letter with the offer within the month following its issue. We will provide the notary of your choice with all the information required to compile the deed. The mortgage loan is finalised by signing the mortgage deed before the notary (where appropriate). The deed must be signed within the 3-month period of validity, as indicated in the offer. Congratulations on your new home. We wish you every success! 2015 Mortgage loan 20

12 We are always at your disposal for further information. Surf to ing.be/home or make an appointment at your ING branch. Mortgage loan brochure n 21, valid as of 15 December ING Belgium SA/NV Bank Marnixlaan 24, B-1000 Brussels Brussels RPM/RPR - VAT BE BIC: BBRUBEBB IBAN: BE Publisher: Inge Ampe Sint-Michielswarande 60, 1040 Brussels Editing Team & Graphic Studio Marketing ING Belgium E 04/ Mortgage loan 22