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).
- 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.
- Purchase or construction subsidy (€ 250 to € 9,700)
As the name suggests, this bonus can be claimed in the event of the purchase or construction of a property. Among the conditions, your housing must not exceed certain surface limits. The amount of aid will depend on your family situation at the time of the act and on your income.
- Savings subsidy (max € 5,000)
This aid corresponds to interest and bonuses on your savings account.
To get it, you must already have obtained the acquisition premium, have used 90% of your assets and have saved for 3 years in a savings account.
- Renovation of hold housing (up to 30% of the amount of renovation work / capped at € 10,000)
The purpose of this bonus is to help improve your accommodation. To be eligible, your accommodation must have been inhabited for at least 15 years (not necessarily by you). The same surface criteria as those of the acquisition premium apply. Also, the amount of the premium depends on your family situation and your income.
- The interest subsidy (0.575% to 2.45% on 175,000 €)
This assistance applies if you have taken out a mortgage loan for your construction, acquisition, development or energy related improvements.
It will allow you to reduce the rate of your loan. Obtaining it is linked to the size of the accommodation, your income and your family situation.
- The interest relief (0.5% per dependent child over € 175,000)
This helps applies if you have taken out a mortgage loan for your construction, acquisition or disabled accomodation. It can be combined with the interest subsidy (maximum 3% in total), depends on the number of dependent children and on your income.
- The KlimaPrêt at zero or low interest rate (max € 50,000, respectively € 100,000 over 15 years including reduction in the loan interest rate + premiums + state guarantee)
If your home is more than 10 years old and you want to make improvements related to energy performance, this help is for you. To get it, you will have to go through an approved bank and work with an energy advisor.
- Subsidy supplement for architect or consulting engineer fees (50% of fees up to a cap of € 1,250)
This aid is subject to the prior approval of the construction or improvement premium.
- Aid for special home adaptations for the physically disabled (60% of invoices / capped at € 15,000)
- Rent subsidy (up to € 300 / month)
If you have a modest income, the state can help.
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.
- 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.