Investing in Rental Property: Yield and Taxation

Why Invest in Rental Property in Belgium?

Rental property remains one of Belgians' favorite investments, and for good reason: taxation is relatively favorable, yields are stable, and rental demand is strong in major cities. In 2025, with the gradual decline in interest rates, rental property is becoming particularly attractive again compared to financial investments with declining returns.

Gross Yield vs Net Yield

Gross Yield

Gross yield is the simplest calculation: (annual rent / purchase price) x 100. For example, an apartment bought for 200,000 euros and rented at 800 euros per month generates a gross yield of 4.8%. In Belgium, the average gross yield is between 3.5% and 5% depending on location and property type.

Net Yield

Net yield accounts for all charges and gives a more realistic picture of profitability. Deductions include:

• Property tax: variable by municipality, typically between 800 and 2,500 euros per year.
• Home insurance: approximately 200 to 500 euros per year.
• Non-recoverable co-ownership charges: between 500 and 1,500 euros per year for an apartment.
• Maintenance and repairs: budget an average of 1% of the purchase price per year.
• Vacancy: expect an average of 1 month of vacancy every 3 years.
• Management fees: if using an agency, between 5% and 8% of rental income.

In practice, net yield typically ranges between 2.5% and 3.5%, roughly 1 to 1.5 percentage points less than gross yield.

Rental Property Taxation in Belgium

Belgium offers relatively favorable taxation for rental income from unfurnished properties. Unlike many neighboring countries, rental income is not taxed on the actual amount of rent received.

Unfurnished Rental (Most Common)

For an unfurnished property rented to an individual who uses it exclusively for private purposes, taxation is based on the indexed cadastral income (CI) increased by 40%. This amount is added to the owner's other taxable income and subject to personal income tax at the marginal rate.

Concrete example: an apartment with a CI of 1,000 euros, 2025 indexation coefficient of 2.1763. Taxable income = 1,000 x 2.1763 x 1.40 = 3,047 euros. At a 50% marginal rate, the additional tax is approximately 1,523 euros, far less than the tax on actual rent of 9,600 euros per year (800 euros/month).

Professional Use Rental

If the tenant uses the property for professional purposes, taxation is based on the actual net rent (rent - 40% flat-rate charges, with a minimum based on the indexed CI increased). This situation is less tax-advantageous.

Registration Rights for Investors

Investors pay the full rate of registration rights, without benefiting from abatements reserved for own dwellings:

• Wallonia and Brussels: 12.5% of the purchase price.
• Flanders: 12% of the purchase price (no reduced 3% rate for investors).

For a property worth 200,000 euros, this represents 24,000 to 25,000 euros in registration rights. Use our notary fee calculator for an accurate estimate.

Best Cities to Invest in 2025

The following cities offer the best profiles for rental investment:

• Liege: accessible purchase prices (150,000-180,000 euros for an apartment), gross yield of 5-6%, strong student demand (University of Liege).
• Charleroi: lowest prices among major cities (100,000-140,000 euros), potential gross yield of 6-7%, but higher vacancy risk.
• Louvain-la-Neuve: guaranteed strong student demand (UCLouvain), near-zero vacancy, gross yield of 4-5%.
• Ghent: dynamic market, strong student and professional demand, gross yield of 3.5-4.5%.
• Namur: Walloon capital under development, moderate prices, gross yield of 4-5%.
• Antwerp: second largest city, dense rental market, gross yield of 3.5-4%.

Mistakes to Avoid

• Neglecting costs: always calculate net yield, not just gross.
• Ignoring the EPC: an energy-inefficient property will be increasingly penalized and harder to rent.
• Underestimating management: rental management requires time and skills.
• Concentrating everything on one property: diversification reduces risks.
• Buying too expensive: a bad purchase price is never compensated by rental yield.

Check prices and yields by municipality on Immolytics to identify the best investment opportunities.