In the light of the rising cost of living, more and more Luxembourgers are trying to optimize their taxation and gain more purchasing power. However, it is not easy to determine which solutions to choose and implement. Here are the tax deduction solutions associated with acquiring real estate in Luxembourg.

Loan interest deductions

All taxpayers can deduct the interest on mortgages (purchase, construction, or renovation work) of their principal residence in Luxembourg, Belgium, France, or Germany.

• The maximum deductible amount for the first 5 years of occupation is €2,000 per year.
• The maximum deductible amount from the 6th to the 10th year is €1,500 per year.
• The maximum deductible amount from the 11th year a is €1,000 per year.

These amounts are increased for each person in the household (including children) See an example of calculation on Guichet.lu

It is important to note that the interest on the housing loan is deductible without a ceiling between the signature of the loan and the start of the domiciliation/ direct debit. The ceilings are activated from the 1st day of direct debit.

Notary fees, loan opening fees, or application fees relating to the opening of the mortgage are also tax-deductible.

Home insurance premiums, whether single or annual, may also be deducted if paid to insurance companies based in the European Union.

To benefit from this tax advantage, the taxpayer must attach to his tax return an annual account statement showing all the fees and interest paid.

Annual payments of a homeownership savings plan

The payments made annually in a homeownership savings plan contract are deductible from taxable income up to the ceiling of €1,344 per year from 18 to 40 years old and €672 per year over 40 years old. Please note that homeownership savings plans taken out in France and Belgium are not deductible in the Grand Duchy.

It is essential to assert here that to take advantage of these tax deductions in Luxembourg, the taxpayer must be a resident or non-resident but with an equivalent status (taxed in Luxembourg as a resident) in the Grand Duchy.

Similar article, property tax reform: tackling the housing shortage