After the abolition of the home bonus: is long-term saving interesting for you to benefit from tax advantages?

What is long-term saving?

You can save for the long term via a

="node" data-entity-uuid="cef059a0-6375-4fa8-a422-1a49928f1e42" href="/node/252">life insurance policy (Branch 21, Branch 23, or a combination of both). The capital you build up this way is paid out on the contract’s maturity date. This is at the earliest on your 65th birthdaystrong>, but your contract can continue for longer. If you die before the contract’s maturity date, the accumulated capital is paid out to the beneficiary(ies) at the time of your death. It is possible to withdraw your capital before the maturity date, but in that case, taxes and surrender fees may apply. Therefore, you should inform yourself in advance.

What tax benefit does long-term saving offer?

The government encourages long-term saving by offering an attractive tax benefit: you can

>recover up to 30% of the saved amount through your personal income tax. The amount you may deduct annually for tax purposes depends on your income: 6% of your net taxable professional income + €176.40, with a maximum of €2,390 (income year 2020). In concrete terms, you can thus enjoy a tax benefit of up to €717.

To qualify for the tax reduction, you must meet, among others, these conditions:>

You are both the policyholder, the insured, and the taxpayer.

Your contract must run for at least 10 years.

You must take out the contract before your 65th birthday.

Can you combine the tax benefit for your own home (housing bonus) with that for long-term saving

?

Whether you can combine the tax benefit for your own home and for long-term saving depends on when

you took out your mortgage loan.

You took out your mortgage loan in Flanders before 1/1/2016

For mortgage loans taken out before 1/1/2016, both benefits are included in the same tax basket. This

means you must reduce the maximum amount for long-term saving (€2,390) by the repayments for your home loan and the premiums for your outstanding balance insurance. These two last items fall under the so-called housing bonus system:
    Loans taken out before 1/1/2015 Loans taken out between 1/1/2015 and 31/12/2015 Loans taken out between 1/1/2016 and 31/12/2019 Base amount for tax deduction €2,280 €1,520 €1,520 Increase for the first 10 years if only home €760 €760 €760 Tax reduction At marginal rate = tax rate you owe on the highest bracket of your income = 25%, 40%, 45% or 50% 40% 40%

The chance that your tax basket is (almost) completely filled by the repayments for your mortgage is high. Taking out a long-term savings plan for additional tax benefit, therefore, does not make sense as long as your mortgage is running.

Is your mortgage (almost) fully repaid and are you not yet 65? Then long-term saving does make sense. With the tax benefit for long-term saving, you can then make up for the benefit lost when your mortgage is paid off.

You took out your mortgage loan in Flanders between 1/1/2016 and 31/12/2019

For mortgage loans taken out in Flanders between 1/1/2016 and 31/12/2019, the so-called integrated

housing bonus applies. This intermediate form of the housing bonus integrates three existing Flemish tax benefits for your own home (the housing bonus, the tax reduction for long-term saving, and the tax benefit for ordinary interest).   Loans taken out before 1/1/2015 Loans taken out between 1/1/2015 and 31/12/2015 Loans taken out between 1/1/2016 and 31/12/2019 Base amount for tax deduction €2,280 €1,520 €1,520 Increase for the first 10 years if only home €760 €760 €760 Tax reduction At marginal rate = tax rate you owe on the highest bracket of your income = 25%, 40%, 45% or 50% 40% 40%

For loans taken out after 1/1/2016, the tax benefit for your own home can be combined with the tax reduction for long-term saving. You can therefore pay in the maximum amount of €2,390 per year in the context of long-term saving and receive up to 30% tax benefit on that payment.

You took out your mortgage loan in Flanders from 1/1/2020 onwards

The Flemish government has decided that the integrated housing bonus will be phased out as of 1 January

2020. Mortgage loans taken out from that date onward no longer qualify for the housing bonus: you can thus no longer claim a benefit for your home loan in your tax return. Instead, the registration tax rate for the purchase of a home is reduced from 7% to 6% (and to 5% for major energy renovations).br />
With the abolition of the housing bonus tax reduction, long-term saving is now certainly attractive for fiscal advantages. In this scenario too, you can pay in the maximum amount of €2,390 per year and receive up to 30% tax benefit.

What about ordinary pension saving?

Long-term saving is perfectly combinable with traditional pension savings.

A long-term savings contract has the advantage that you can continue it past your 65th year, and thus also enjoy a tax benefit for a longer period.

Pension saving is usually more advantageous than long-term saving due to a lower final tax. The tax benefit (except for dual pension saving) is the same for both pension savings options: 30% of the paid premiums. However, the final tax with pension saving is only 8%, compared to 10% for long-term saving.

More info?

Contact your account manager or call us at 03 482 15 30.