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Belgian mortgage using UK salary

Question

Hi All,

I’m moving to Antwerp from the UK to be with my girlfriend who’s a student and we are looking to buy a fixer-upper together. We had some questions, which are proving difficult to find any answers to - it seems our situation is quite specific!

-Is it possible to get a mortgage based on a UK salary and are there any tax implications of this? We do not own any other property.

-I plan to quit my job and get Belgian citizenship once we own the house. I will then work full-time on the renovation. I assume this is possible so long as we continue to pay our monthly repayments?

-We are aware of the one year rule regarding living in a property before selling. We are considering putting this first house in my name and then selling it after a year. We would then put the next property in her name. Would that help navigate the tax implications?

-Are large gifts to my girlfriend taxable i.e. if I gave her the money to buy the second property (in the UK it is above a certain threshold)?

We’ve done a lot of research and intend speak to banks regarding mortgages in due course. Any initial help would be really appreciated!

Thanks in advance

kasseistamper

I got a mortgage based, in part, on a UK income and I'm not aware of any tax implications which were affected by the source of that income.
However, I'm absolutely certain that every mortgage lender will base their decision on your specific circumstances and their in-house rules. An obvious consideration will be that they need to be sure than your income will continue into the future.
In the UK, if you default on a mortgage, the lender can apply to the court for a repossession order. In Belgium, if you default on a mortgage and the lender applies to the court, they will be required to prove that they took every reasonable step to ensure that you could repay in full. Hence, lenders here are very careful about how much they lend and for how long.
When you buy your property you will have to employ a notaris. Ask all your questions of a notaris now. They do not charge for giving advice, only for actually acting for you and their fees are set by law.

Feb 15, 2021 11:21
J

> I plan to quit my job and get Belgian citizenship once we own the house
Hmm. Bad idea. You won't get the work visa you now need if you're not working.
As for citizenship, you have to be living and working here for at least 5 years before you can apply.
Don't confuse citizenship with residency, but you won't get that either - as a student, I'm pretty sure that your GF isn't covered by the withdrawal agreement, and you have no formal relationship, therefore you can't be a trailing spouse.

> We are aware of the one year rule regarding living in a property
Which rule is that?
I am aware of Capital Gains Tax if you sell within 5 years.

> putting this first house in my name
GF would therefore have no legal rights over it whatsoever. Dodgy as heck.

> Are large gifts to taxable
Yes. Rules differ by region.

Do you really think it's a good idea to do this under the current Covid turmoil? You could end up with a property nobody wants and a prices collapse once lockdown finishes and we start to see who has or has not still got a job.

Feb 15, 2021 12:15
Ciaran

Thank you both for your advice (I don't seem to get notifications of replies hence the slow reply!)

Kassiestamper - that's reassuring to know it's possible get a mortgage. Which bank was that? And brilliant, we'll get in contact with a notary.

J - thanks for responding on all the points. We've spoken to someone at the registration office and they've confirmed that I should be able to register as we have lived together in the past. I will also keep my job (and work remotely) until it's all in place - good advice.

We have found conflicting advice on CGT, but my understanding is if you live there for one year you can avoid it.

And yes there is clearly risk involved but we're confident if we buy a fixer-upper for substantially below market value then there will be enough of a buffer to make it stack up. It's also more a lifestyle change rather than a purely business venture. And FYI we would have a separate written agreement if we chose to put the property in only one of our names.

I was also wondering if it's possible to re-mortgage properties in Belgium i.e. if we bought a house with cash could we then release equity? I have seen home renovation loans but you need to prove where the money is spent and this wouldn’t work for us. Thanks

Feb 20, 2021 12:23
Ciaran

I got my information on CGT here:

https://www.taxpatria.be/faq/is-there-really-no-capital-gains-tax-in-bel...

'Your private residence is always tax-exempt on the condition that you occupied it for at least 12 months. '

Feb 20, 2021 12:39
kasseistamper

The bank was Argenta.
At the time that we got the mortgage, I had been a customer with them for 7 or 8 years and my wife for many years longer. Also, we were putting down a very significant deposit so the bank's risk was probably not much more than half the value of the house.

Feb 20, 2021 22:16
yttap

Buy a property and sell after a Year? You need to know that when you buy a property in Belgium there is a tax payable of 12.5% to the government and about 5% legal fees - the tax in Flanders might be different. These are the figures in Brussels. So you need to factor in 17.5% on top of the property price. So it is unlikely that you can make a profit over the buying price if selling after one year!

Feb 22, 2021 08:01
anon

1) Although you may be able to get a mortgage "in part, on a UK income" as KASSEISTAMPER has, personally I think it is highly unlikely that you'll get one baed only on a UK salary. You should probably approach some of the mortgage brokers as well as going direct to the banks.

2) "I plan to quit my job" - How are you going to pay your mortage?

3) "and get Belgian citizenship" - You need to have lived in Belgium for 5 years before you can even consider applying for citizenship.

4) Have you considered the costs of buying property in Belgium? As YTTAP notes above, the costs of buying a property in Belgium are considerably higher that you may be used to in the U.K. Depending on where you live, and the cost of the house, your purchase costs are going to be in the region of 13-18% of the value of the house. Some of these costs can be reclaimed if you sell and move on, but not all.

5) Large gifts can be taxable, particularly when it comes to property. You will also lose any and all rights over the property as your girlfriend will be the sole legal owner of the property. If, as you say in your subsequent reply that you'll have "a separate written agreement", then that proves you did not gift the money to her, and you will have a bunch of legal and tax consequences for that.

6) is it "possible to re-mortgage properties". Yes it is, but as you have discovered yourself, it is typically in the form of home renovation loans where the money will be released to you against invoices showing work done to renovate your property, or to buy another property. Credit in general in Belgium is far more strictly controlled than in the U.K. There can also be significant legal fees in getting a remortgage.

I certainly don't want to pour cold water all over your plans. In fact it's admirable that you want to move here and make some money, but I think you probably want at a minimum to 1) speak with a notaire about the process and costs of buying and selling houses, and 2) get advice from an accountant. There could be significant tax implications in what you're planning to do (buying and turning around property, giving significant sums of money to unrelated third parties to avoid taxes, etc. etc.)

Feb 22, 2021 12:42
Ciaran

Thank you for all the responses - they've been very useful.

It seems that Brexit has really thrown a spanner in the works regarding mortgages. With the UK now outside the EEA it's proving very tricky, even with a deposit of half the property's value. As such, my partner has decided to work in parallel to her studies to secure a mortgage. So a change of plan! Personally I'm quite surprised that no bank would lend to us, but perhaps this will change over time once the fallout of Brexit has settled.

Again, thanks for the input.
C

Mar 6, 2021 10:12
anon

@ CIARAN "Brexit has really thrown a spanner in the works regarding mortgages"

You can blame Brexit for a lot (and I'm more than happy to do that), but this isn't one of them I'm afraid. This has nothing to do with Brexit, and everything to do with the security the bank has that they will be able to secure payment for their mortgage. It would be the same for someone wanting to raise a mortgage in Belgium using a French or Dutch or German salary.

Mar 7, 2021 10:07

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