Belgian Finance Minister Jan Jambon (N-VA) has expressed confidence that the planned abolition of the federal mortgage interest deduction for second homes will hold up legally, despite growing criticism from opposition lawmakers.
The measure, which is part of the federal coalition agreement, aims to end tax relief on interest payments for loans taken out on non-primary residences.
Speaking in Parliament’s Finance Committee on Tuesday, Jambon assured lawmakers that the government’s decision is legally sound and will take effect with next year’s tax filings.
He was responding to concerns raised by Open VLD legislator Vincent Van Quickenborne, who described the measure as a “breach of contract.”
“This affects thousands of people who have signed contracts, and you’re tearing them up overnight,” Van Quickenborne said, arguing that the government should consider a phased transition rather than an abrupt abolition.
The federal government’s decision will impact property investors and individuals who have purchased additional real estate for rental or personal use.
While the measure had initially led to some confusion, Jambon confirmed that it would not be applied retroactively to tax filings for 2024, as such a move would be deemed illegal. Instead, it will come into effect for the 2025 tax year.
Legal and Economic Justifications
Despite opposition from some lawmakers, Jambon defended the measure as necessary to address Belgium’s budget deficit.
“The government wants to reverse the trend in the interest of the country and future generations, and part of that effort must come from those with the strongest shoulders, including those earning income from real estate,” he stated.
Jambon emphasized that the abolition of the deduction aligns with broader fiscal responsibility measures, ensuring that those who benefit from multiple property investments contribute more to the national budget.
The government is also implementing a tax reduction worth €1.5 billion, targeted specifically at supporting the working middle class.
However, critics argue that the policy unfairly impacts individuals who have already made financial commitments based on existing tax benefits.
Van Quickenborne pointed to the abolition of the passive housing interest deduction in 2013, which was ultimately ruled unconstitutional by the Constitutional Court, as a precedent that could challenge the government’s decision.
Impact on Property Market and Investors
The abolition of the mortgage interest deduction for second homes is expected to have significant repercussions for Belgium’s property market.
Investors and homeowners may need to reassess their financial strategies, particularly those who rely on rental income to offset mortgage costs.
Market analysts warn that the measure could lead to reduced investment in real estate, potentially affecting housing supply and rental prices.
On the other hand, proponents argue that eliminating the deduction could help cool down property speculation and make homeownership more accessible to first-time buyers.
As the government moves forward with the measure, legal experts and real estate stakeholders will closely monitor its implementation and potential legal challenges.
The debate over fiscal fairness versus contractual obligations is set to continue in the coming months.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members
