On December 4, the Walloon Parliament adopted a major reform of Walloon taxation with regard to registration and inheritance taxes.
The new decree has two parts:
- A new reduced rate of registration fees for the purchase of a single home, applicable since January 1, 2025.
- A general reduction in inheritance tax and a cap on real estate gift tax from January 1, 2028.
These changes underscore the importance of conducting estate and inheritance planning tailored to your needs.
Inheritance tax reform: necessary changes
This long-awaited reform of inheritance tax aims above all to put an end to rates that are considered excessive and sometimes "confiscatory." Until now, many families have been forced to sell inherited property because they could not afford the financial burden of inheritance tax.
The problem is even more pronounced in cases of inheritance without family ties, where rates can reach 80%, making this reform all the more necessary.
The new measures will also take into account changing family structures in Wallonia, where nearly 20% of households are "blended families." This reality complicates many inheritance situations, justifying a de facto revision of tax rules.
By reducing inheritance tax rates, Wallonia is finally aiming to catch up with the country's two other regions. This harmonization should therefore strengthen the competitiveness ofthe Walloon tax framework.
At the same time, real estate gift taxes will be reduced in order to encourage this method of early wealth transfer. According to the government, this approach promotes "partial reinvestment in the economy at a time when the beneficiary needs it most," thereby strengthening the economic and social benefits of real estate gifts.
What changes will there be to inheritance tax and real estate gift tax rates?
- Inheritance tax:
- The maximum rates for direct descendants, spouses, and legal cohabitants will decrease from 30% to 15%.
- For siblings, they will decrease from 65% to 33%.
- Between uncles/aunts and nephews/nieces, they will go from 70% to 35%.
- For everyone else, rates will drop from 80% to 40%.
- Real estate gift tax:
- For direct descendants, spouses, or legal cohabitants, the rates will drop from 27% to 14%.
- For everyone else, they will decrease from 40% to 20%.
For more information on who will benefit from this reduction in real estate gift tax, seethe article in L’Écho.
What other changes does the reform provide for?
The assimilation of the children of the spouse or legal cohabitant of the deceased (or donor) will be extended to all degrees in order to allow the (great-)grandchildren of the spouse or legal cohabitant to benefit from preferential rates for inheritance and real estate gift taxes.
Children taken in by foster families will also be treated as the biological children of the deceased (or donor).
Furthermore, the deceased will no longer be required to have resided in their primary residence for at least five years in order for their spouse (or legal cohabitant) to be eligible for the tax benefits applicable to that property.
Finally, the heirs could opt for a lump sum for funeral expenses. In this case, the lump sum will simply be included in the liabilities of the estate and the heirs will not be required to provide supporting documents.
Why is estate planning still essential?
Ultimately, inheritance tax and real estate gift tax rates will generally be halved. The impact will be greatest in the case of inheritances without family ties, with the prohibitive rate of 80% being reduced to 40%.
However, lower taxes do not solve all the issues related to wealth transfer. Beyond the purely fiscal aspects, planning your estate also allows you to meet personal objectives such as fairness between heirs, availability of capital, or preservation of certain family assets. These considerations should not be overlooked, even in a context of lower inheritance tax rates.
In addition, the transition period between 2025 and 2028 calls for increased vigilance. Careful estate planning remains essential to avoid inconvenience in the event of unexpected death during this period.
Our wealth and estate planning experts are available to guide you in adapting your strategy to this reform and your objectives.Contact an expert forpersonalized support.
By Julie G
I would like a free quote
Fill out the form below to receive a personalized offer: