Tax deductibility of rental charges

From the assessment year 2024 onwards, a sole proprietorship or company can no longer deduct, for tax purposes, the rent paid for real estate used for professional purposes or the fee for the use of property rights (such as ground lease, surface rights, usufruct and easements) without completing additional formalities.

From now on, you must attach a form 270 MLH per property, to your income tax return in order to deduct the rent or fee paid for tax purposes.  The form should communicate the following information:

• the location of the property
•  the charge paid, and
• the amount to be deducted for tax purposes.

If you pay an overall fee for several undeveloped plots, one form will suffice. Spouses or legal cohabitants who are taxed together and who both deduct fees as actual professional expenses for the same property must attach two attachments for this property to their joint return. If you fail to comply with this reporting requirement, the fees and benefits paid will not be tax deductible.

This additional disclosure requirement was introduced to assist the tax administration in verifying that private landlords have correctly declared their rental income. For example, tenants who deduct rent as a professional expense must now add an attachment to their tax return as an individual person or as a corporate or legal entity. In that attachment, they must also provide information about the landlord: surname, first name and full address, national registration number or company number.

The administration has indicated that write-offs are not considered fees and therefore should not be included on the new Standard Form 270 MLH.

No270 MLH attachment should be added in the following cases:

1. when the rental agreement is registered free of charge. In this case, rent cannot be deducted as a professional expense.  When a rental agreement is registered free of charge, it is assumed that the property is for residential use only and therefore not used for the professional activity. An exception applies when the property is leased for the sole purpose of providing housing for one or more employees or company directors and possibly their families pursuant to a legal or contractual obligation.  The rent may then still be deducted as a professional expense, on condition that the attachment is included with the tax return.
2. when an invoice or document valid as such is issued for the rent or fees for a surface right, ground lease or other right of use in rem.
3. when renting out a property with a lease agreement in accordance with the leasehold law or a similar foreign law limiting lease rates, that is being used for agricultural or horticultural purposes.

In your personal income tax return, do not forget to tick the 1072-92 and/or 2072-62 box when adding form 270 MLH.  These codes can be found in box XIII, subsection E. If you have any additional questions or comments about this, please contact us. Our specialists are ready to help you.