The news had almost gone unnoticed. Since January 1st, 2017, and so, since the entry into force of the tax reform, home purchase savings plans contracted in Luxembourg must be used for housing only.

Until now, the money released at the end of the savings period could be used for anything: holidays, buying a car or a trailer, paying for a driver’s license, etc.

Now, however, savings must be used in the real estate sector: rental investment, home purchase, renovation, early repayment of a housing loan, etc.

However, according to the Minister of Finances of the Grand Duchy, a financial institution cannot refuse to give savings to its beneficiary, even if this beneficiary does not intend to invest the money in real estate. In this case, the decision on the deductible contributions reverts to the tax administration (what about the restitution of the tax deductions granted until then?)

Home Purchase Savings Plan: An Attractive Return Despite Everything

Schwäbisch Hall, BHW, and Wüstenrot are the three financial players in home purchase savings plans in Luxembourg. Their contracts remain very attractive from a tax point of view. They allow you to achieve savings on the one side, as well as to optimize your tax deductions if you fill out your income tax return in Luxembourg.

Indeed, since the tax reform, someone under 40 years of age can place (and thus deduct) up to €1,344 per year through a home purchase savings plan, compared to €672 before the reform.


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