Moneymakeover Living in Belgium - €450k cash - what to do with it?

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Machabar

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Hi all,

I'm fortunate enough to have come into money recently and am struggling to figure out what to do with it. I live in Belgium and own a family home here here but am being pushed to invest in property in Ireland or here - I'm not entirely sure it's the right thing to do. I'm also conscious our pensions aren't very high right now.

All advice would be much appreciated also on the risks of investing in property. It's discussed like it's a no brainer but I feel the Irish property market is very exposed to US politics and if something were to happen to all the tech companies based in Dublin, prices could really drop.

Personal details
Age: 44
Partner age: 48
Two children, 7 and 12

Income and expenditure
Monthly joint take-home pay: EUR5300 (Belgian income taxes are very high so there's no point in sharing our pre-tax income)
Type of employment - Employed
Employer type: NGO and corporate

In general we are savers and are able to save around EUR500 every month, although our mortgage payments are quite high.

Summary of Assets and Liabilities
Family home value: EUR750k
Mortgage on family home: Yes, we have EUR220K left on it.
Net equity: (I don't understand what this one means)

Cash: EUR450k

Total net assets: EUR1.2M

Family home mortgage information
Lender: A Belgian bank
Interest rate: 2.2%. It will remain at max 2.2% thanks to Belgian mortgage protection
Remaining term: 9 years
Monthly repayment: EUR2300

Other borrowings

Additional loan needed to complete the house, also with a Belgian bank:
Interest rate: 2.48%
Remaining term: 4 years
Monthy repayment: EUR370

Pension information

Value of my pension fund: 25K
Value of partner's pension fund: 15K
We both put EUR100/week into our Belgian pensions, which is the minimum amount to gain a 30% tax credit.

Other savings and investments

We don't have any other savings or investments.
 
You’re probably right to be cautious about Irish property, so don’t let yourself be press-ganged into an inappropriate property investment.

My first question is what state pension are you likely to have? Not familiar with Belgium but if I was relying on the Irish state pension, 40k combined pension pots at mid-40’s is very low so I’d be looking to get all/most of the 450k into a pension wrapper as rapidly as tax criteria allows. There’s little point in using it to clear a mortgage with such a low rate imo.
 
First of all please note that we don't allow speculation on house prices on askaboutmoney. But discussing whether to buy property in Ireland or not is fine. But saying "Trump is going to cause Irish property prices to fall" is not allowed.

My initial thought was that if you are planning to return to Ireland, then you should buy a house in Ireland to have a stake in the market.

If you were renting in Belgium and you had €450k cash and were definitely planning to return, I think that would be the right strategy.

But if you return to Ireland, you will probably sell your home in Belgium and buy a house for about €1m rather than for €450k. So, it's very clear to me that you should not buy a house in Ireland until you have sold your home in Belgium and are definitely coming back.

The advice would have been different a few years ago. But these days you may not be able to get rid of the tenants so that you could sell it or so that you could occupy it as your home, so it's just too risky.

It's also very difficult to comply with Irish anti-landlord legislation and even more difficult if you are trying to do it from another country.

So forget about buying an Irish property.
 
As you are tax resident in Belgium, you should ask a local financial advisor or tax advisor what is the most tax efficient way for you to invest. As a non-national, there may be some opportunities for you to invest tax-efficiently.

But it is very unlikely that investing in Irish shares for example would be a good investment for a Belgian resident.

I know nothing about the Belgian pension system. But presumably there are some incentives to contributing. But if you are planning to return to Ireland, maybe a Belgian pension fund might be a bit complicated.

Persia said:
you are very underfunded for your ages?
Click to expand...

While on the face of it, you are underfunded, having €450k in cash is a pretty good position to be in.

So if the tax relief is not generous and/or it's complicated to get it back to Ireland on maturity, don't feel that you must have a pension fund.
 
Thanks all, and duly noted on the property market speculation.

Like everything else in Belgium, pensions are complicated :D But the short answer is I would get a state pension worth about EUR1,000/month plus my own private pensions. My current employer doesn't contribute but I can put in around EUR1,300/year and get a tax credit worth EUR300. So my partner and I both do that.

I'm grateful for the confirmation that our pensions aren't in a good place. I will be focussing on that.

We're not really planning to move back to Ireland in the near-term, or the longer-term to be honest. The quality of life in Belgium is very good - public transport, health sector. OK, the education system isn't as good as Ireland but it's not the worst.

Would it make sense to put some of it into a pension fund and some of it into some sort of investment where there's a regular income? I've been told the options are mainly ETFs or property - and I know even less about ETFs than I do property!

Thanks again all. This is really valuable feedback for us.
 
As you are not coming back to Ireland, you should not be buying property in Ireland.

And as you are not coming back to Ireland, you should be taking local advice on how best to invest.

Maybe the tax credit on the pension is worth it. It's hard to know.

Don't apply what is a good strategy for Irish investors to Belgium. It doesn't follow.
 
The regime for investing in ETFs in Belgium seems extraordinarily generous compared to Ireland. They seem to have only started to tax capital gains from this year - and even at that the tax is just 10% of the gain, with a €10,000 per year tax free allowance. Although there is a higher transaction tax for purchasing accumulating ETFs.

curvo.eu

Investor's guide to the Belgian capital gains tax

Belgium introduces a 10% capital gains tax in 2026. Learn how the €10,000 exemption works, what your broker will do, and if you need to change your strategy.
curvo.eu curvo.eu

I would be doing a lot of reading on that if I were you - we can only dream of a system like this over here.
 
Thanks Brendan, that is sound advice! The reason I was also interested in a buy-to-let in Ireland is that non-resident landlords pay a flat rate of 20%, which would be interesting. In Belgium landlords pay VERY little tax on rental income but the stamp duty here is a painful 12.5% and I just payed an eyewatering amount of CGT.

@misemoi, we are what's called 'legally cohabitating' which brings all the financial benefits of being married apart from me being able to access his pension and vice versa. We will fix that very soon -most people here do get married in their 50s if they aren't already for this very reason.
 
Machabar said:
The reason I was also interested in a buy-to-let in Ireland is that non-resident landlords pay a flat rate of 20%, which would be interesting.
Click to expand...
I don't know the answer, but is the 20% just a withholding tax, are you still liable for the balance via Irish self assessment because the property is here or do you pay additional tax in Belgium because you are resident there?

Tax is anyway only a minor part of this. Read other threads on here about the anti-landlord rules coming in here on 1 March. You're likely to end up with a liability on your hands and/or not able to evict a difficult tenant. More anti-landlord rules are likely to follow. All these making renting practically impossible if you are based here and, I would imagine, 100% impossible if you are based abroad.

If you are interested in buy to let, Belgium must be better aside from the tax. Landlord/tenant regulation there can't be as insane as it is here.
 
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Yes that would make sense but the interest rates on our mortgage and loan are so low. Or am I mistaken?

@Greenbook, there's no additional tax on Belgian landlords once it's paid elsewhere as there's a double taxation agreement with Ireland. Same with CGT - I just paid a load of it to the Irish taxpayer and don't owe any to the Belgian authorities.

The rental market is actually a lot more regulated in Belgium but it's fairer on both sides. Most rentals are unfurnished, which helps a lot. But I can't get over the 12% stamp duty. It means buying a 300k apartment would actually cost 340k. It would take years to make back that tax cost.

Are there any generally applicable rules on pensions? a percentage of income that should go into them? A certain amount that should be achieved by a certain age?
 
Machabar said:
Yes that would make sense but the interest rates on our mortgage and loan are so low. Or am I mistaken?
Click to expand...
It's still a cost to you though. Is there any tax relief today reduces the gross cost? Can you get a better guaranteed net return elsewhere compared to the savings to be made by reducing or clearing your mortgage?
Machabar said:
Are there any generally applicable rules on pensions? a percentage of income that should go into them? A certain amount that should be achieved by a certain age?
Click to expand...
You need to estimate what your retirement age and likely target lump sum/retirement income are and plan for that.
 
Machabar said:
Same with CGT - I just paid a load of it to the Irish taxpayer and don't owe any to the Belgian authorities.
Click to expand...

Are you sure?

What did you do? Sell a property in Ireland? If so, why are you thinking of buying another one?

Or did you pay Capital Acquisitions Tax?

You really do need local tax advice.
 
Yes, I was effectively forced to sell my share of a property by a family member. I didn't want to sell it, it was an ugly business.

@ClubMan, thanks these are definitely the right questions for me to be thinking about.
 
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