Housing aid

It is a fact, finding accommodation in the Grand Duchy of Luxembourg is not always easy from a financial point of view. However, whether you want to acquire, renovate, develop or rent a property, the Luxembourg state has put in place aids that you could benefit from.

Even though not all the links you will find on this page are available in English, in this regard, the site of the Housing Ministry is very well designed. You will also find a lot of information on Guichet.lu. The government has published explanatory brochures on the subject. Finally, the counter for Housing is the single point to answer your questions around this.

Here, of course, the goal is not to replace the administration or to be exhaustive, but to briefly describe various aids that could be applicable in your case. In each paragraph, you will find the adequate link towards the public site.

Short summary of housing benefits

Aid offered by the state takes different forms. This can be a guarantee, premiums paid in capital, reductions in interest rates on loans or tax advantages (taxes or VAT).

State guarantee

  • Candidate to buy, build or renovate
    To grant a loan, banks needs some guarantees, if you’re having trouble providing this, the state offers to guarantee up to 30% of your loan. Of course, the amount is capped and certain criteria must be met. The same type of guarantee can be obtained under the KlimaPrêt discussed below.
  • Candidate to be tenant
    Taking out two or three months’ rental deposit can be problematic, if you agree to save the money over three years, the state can vouch for you.

Premiums paid in capital

If you meet the conditions, you can get financial assistance from the state. The property must of course be located on Luxembourg territory. In addition, it will generally work if you are not the owner or usufructuary of another property. Also, the accommodation must be used as the main accommodation and you must agree to stay there for a minimum period.

Other rental aid

If you are a student or if your income level does not allow you to find accommodation, the state can help you through various organizations.

Indirect aid (tax benefits)

  • Reduction of registration and transcription fees (max € 20,000) – Bëllegen akt
    In the event of a transfer (change of owner of a property), the state will generally charge 6% (registration) + 1% (transcription) making 7% in total. You can, once in your life, benefit from a reduction of these costs up to a maximum of € 20,000. To apply, you must agree to occupy the building within 2 years (if no renovation work) to 4 years from the notary deed. You will also have to commit to living in it for a period of at least 2 years.
  • Reduced VAT rate (max € 50,000)
    The normal VAT rate is 17%, but you can benefit from a reduced rate of 3% for construction and renovation work related to your main home. The amount of the tax gain is capped at € 50,000. In other words, 3% VAT can be applied to a maximum amount of € 357,143 in.
    Please note, not all types of work are eligible.
    The rate of 3% can be granted directly on the invoices if the request has been made beforehand. If this is not the case, the request must be made after the fact, on the basis of the invoices, and the administration will reimburse.
  • Remaining Due Balance insurance
    When you fill your tax declaration, you are normally entitled to a deduction of € 672 for special expenses. If you have subscribed to a remaining due balance insurance as a single premium, this limit is increased. The increase depends on the age of the taxpayer and his family situation.
  • Mortgage registration
    You can fully deduct the mortgage registration fees from your property. One condition, not having lived in the property at the time of payment of these costs.
  • Debit Interest
    Debit interest paid before the occupation of the property is fully tax deductible
  • Home buyers savings account
    This product allows you to access a loan at advantageous conditions. You can also use the accumulated savings as needed. However, in all cases, the money must be used to finance work on your home. In addition, this product is deductible in the “special expenses” section of your tax return.
  • Social rental
    As a landlord, if you decide to rent out a property in cooperation with the Ministry of Housing, you will benefit from a tax reduction of 50% on your rental income.

Conclusion

As you can see, the subject is wide. Of course, BLImmo is by your side ! Do not hesitate to use our services and to contact us. It is our job to guide you in the real estate world.