On Wednesday the Luxembourg government presented some of the measures it will put in place to support the property market and ease the financial burden of housing for residents.

Some measures will apply this year only, backdated to 1 January 2024. They include:

  • raising the Bëllegen Akt (the tax credit on notarial deeds) from €30,000 to €40,000 per person for deeds signed in 2024 – €80,000 for a couple
  • a new “Bëllegen Akt” for buy-to-let investment. This “completely new” measure applies to off-plan sales (VEFA), for investors who let the property for at least two years. The tax credit is set at €20,000 per person, i.e. €40,000 for a couple
  • a lower overall rate of capital gains tax, from 20% to 10%. This is temporary: the rate goes back to 20% next year. To count as a capital gain rather than a speculative profit taxed at the normal rate, more than two years must pass between the purchase (or creation) and the sale
  • the accelerated depreciation rate for homes built for letting and purchased in 2024 rises to 6% for 6 years. The maximum annual amount that can be claimed is capped at €250,000
  • property capital gains reinvested in homes used for social rental management in Luxembourg, or in homes in energy-performance class A+, will be tax-exempt

Medium-term “structural” measures

  • a 33% increase in tax-deductible mortgage interest. During the first 5 years of occupation, the deduction ceiling rises from €3,000 to €4,000 per person; then from €2,250 to €3,000 after the 5th year; then from €1,500 to €2,000 after ten years of occupation
  • tax relief on letting a home made available for social rental management: the rate rises from 75% to 90%, so 90% of that rent will be tax-free
  • the tax exemption on capital gains and disposal profits on property will be extended to the Fonds du logement
  • a starter bonus for young people entering the workforce: up to the age of 30, they can receive a €1,000 “rent” bonus paid by their employer, 25% of it tax-free. Limited to incomes of no more than 2.5 times the qualified minimum wage.