7 Questions About Buying a New Construction Property
Have you found a property that seems to meet your expectations, but it's a new construction? Or maybe you intend to have your own home built? Here's what you need to know before you venture into new construction!
1. When and how do you become the owner of a property purchased off-plan?
As soon as you sign the preliminary sales agreement, you become the owner of the land. The ownership of the house will be transferred to you gradually as the construction progresses. Rest assured, the notary will include specific clauses in the deed of sale to ensure full transparency of the process.
2. What are the purchasing fees?
In Belgium, the purchase of real estate is taxed. You’ve probably heard of "registration fees." If the property is a new construction, the sale will instead be taxed under the VAT regime, which is 21%.
You can calculate your purchasing fees by obtaining an estimate through the calculation tool available on notaire.be.
3. What are the payment terms?
It is illegal to pay for the entire construction before signing the preliminary sales agreement. However, the seller may ask for a deposit, which must not exceed 5% of the total price.
Be careful! If the contractor goes bankrupt, you could lose this deposit.
Only after the signature of the preliminary agreement can you pay for the land and the work that has already been completed. The remaining balance can be paid as the construction progresses.
4. Can the price of the property increase along the way?
Know that once the preliminary sales agreement is signed, the seller can no longer change the price, unless a price revision clause has been included. However, any increase must be justified by factors such as the indexing of workers' wages or fluctuations in the prices of building materials. Rest assured, if you change your mind after reserving the property due to a price increase, you can withdraw from the sale without any charges. If you had paid a deposit, it will be refunded.
5. What should you check before buying?
As with any purchase, it’s important to visit the neighborhood to ensure it meets your expectations. If you’re considering buying an apartment, don't forget to inquire about the co-ownership, including the fixed costs and the rules governing it. For a purchase off-plan, it is also crucial to research the developer’s and architect’s past projects. Don’t forget to check the expected delivery timeline to avoid any unpleasant surprises.
6. Will the completion of the construction be guaranteed?
The Breyne Law requires the contractor to provide a guarantee through a financial institution. This guarantee is 5% of the cost of the works for an approved contractor and 100% for an unapproved contractor. Therefore, an unapproved contractor provides a guarantee for the completion of the works. In the event of bankruptcy, for example, the bank will be required to provide the necessary funds to complete the construction of your home.
7. If you sell your property later, will you be taxed on the capital gain?
If you sell a property less than 5 years after purchasing it, you may be subject to a capital gains tax at a rate of 16.5%. The capital gain is calculated by subtracting the purchase price from the selling price. However, this tax does not apply to "family homes." In other words, if you lived in the property with your family, you will not be taxed on the capital gain. However, if the property was rented out and you sell it, the tax will apply.