Property: I've decided to invest!

In line with the measures relating to the property sector and the acquisition of property by individuals, there are a number of measures available to anyone wishing to invest in property.

Leyli Schaber of LA Immo tells us about the support currently in place:

1. The tax credit (Bëllegen Akt), which considerably reduces the cost of buying a property, especially for first-time buyers. A couple can save up to €80,000 (€40,000 per person) on the purchase price. By way of exception, the tax credit is even available to ‘VEFA’ investors for rental of up to €40,000 per couple (or €20,000 per single person).

2. Reduction in registration fees. This is 50% of the registration duty (3.5% instead of 7%) and applies to purchases between 1 October 2024 and 30 June 2025.

3. Reduced VAT for the purchase of a new home intended to become the principal residence, with the VAT rate reduced from 17% to 3%, with a ceiling of €50,000 in VAT.

4. Reduced-rate loan: This financial aid from the State offers advantageous conditions with a preferential interest rate to finance part of the purchase of a new property.

According to Leyli Schaber, ‘these provisions are quite attractive, and it's true that we've felt a serious upsurge in interest in new construction since these recent announcements. This is particularly true in the €500,000/€1,000,000 bracket, and even in the land portions exceeding the thresholds under the old system, where our customers can now benefit from budgetary assistance.

As far as current advice is concerned, it should be remembered that the housing sector has been marked over the last 12-18 months by rising interest rates and falling property prices. However, after this exceptional fall in 2024, prices in the Luxembourg property sector have stabilised, partly due to a galloping rise in rents.

We now recommend that our clients reassess their situations to take advantage of these government measures, which are valid, for the time being, until 1 July 2025. It is also undeniable that the cost of raw materials is likely to rise in the long term, so construction prices are not going to fall. It should be noted that contracts for new buildings are signed without an indexation clause, which was not the case before the housing crisis.

The measures already in place,’ continues Leyli Schaber (LA Immo), ’are already quite effective, and an extension to the end of 2025 would be desirable, given the administrative procedures that sometimes take up precious weeks until the announced end of the measures in June.

Jean-Paul Scheuren (CIGDL) adds that ‘the strongest measure is accelerated depreciation, i.e. the possibility of deducting part of the cost of construction for tax purposes for a period of six years.

6 years, i.e. 6% of the price of the building (not the land). ‘This is a major tax deduction,’ comments the President of the Chambre Immobilière du Grand-Duché de Luxembourg. ‘The 6% measure will run until the end of June, after which it will be reduced. Its purpose was to combat the crisis of confidence and to revive the VEFA, and it should be noted that, depending on the case, other forms of aid (5%, 2%, etc.) are available.

For more information on investment, visit aides.lu

Alix Bellac