The measures introduced earlier this year by the Luxembourg Government to tackle housing challenges and boost the Real Estate sector have been extended untilJune 30, 2025. Here's an overview of the incentives key:
Tax credit for primary residence : The "Bëllegen Akt" tax credit for the purchase of a primary residence has been increased to €40,000 per individual.
Tax credit for Rental Housing : A new "Bëllegen Akt Investors" tax credit of €20,000 per individual is now available for off-plan purchases of properties intended for rental (VEFA - Vente en l’état futur d’achèvement).
Accelerated depreciation : Accelerated depreciation has been raised to 6% per year for six years, applicable exclusively to new properties (VEFA), with a cap of€250,000.
Reduced Registration Fees : Registration fees have been reduced from 7% to 3.5%. This applies to both existing properties and off-plan properties (VEFA) if purchased as a primary residence, and to new off-plan only for investors.
Capital Gains Tax :Capital gains tax has been reduced to 10% (down from the usual 20%) on property sales. Full exemption applies to properties with an A+ energy efficiency rating or homes transferred for social housing management.
Increased tax deductibility for mortgage Interest : The deduction ceilings for mortgage interest related to owner-occupied housing or housing intended for future owner-occupation will be increased by one-third.
Higher exemption for Net Income from Social Rental Management : The exemption on net income earned through renting properties via a social rental management organization will rise from 75% to 90%.
Partial tax exemption for Housing Rental Subsidies : A partial tax exemption will be introduced for housing rental subsidies provided by companies. This benefit will be capped at €1,000 per month, with 25% of the subsidy being tax-exempt. This scheme is exclusively available for young employees under the age of 30 with incomes not exceeding 2.5 times the qualified social minimum wage.
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