Government support for the purchase of a property in Luxembourg

Home ownership subsidy

In Luxembourg, you may be eligible for a home ownership subsidy to buy or build your home.

Who is eligible? In order to benefit from the home ownership subsidy, you must be a Luxembourg resident, it must be your only property, and you must have taken out a mortgage with a bank or credit institution.

An other condition is that the home must be your main and permanent residence for at least two years after payment of the subsidy.

How much? The level of this subsidy is fixed on the basis of the income breakdown of your household. It ranges from EUR 500 to EUR 10,000. If the home is an apartment in a condominium or a terraced house, the subsidy is 40% higher. If it is a semi-detached house, the subsidy is 15% higher.

How to take advantage of the scheme You must apply for your home ownership subsidy through the Single point of contact for housing assistance within one year of signing the notarised deed of purchase for an existing or off plan (VEFA) property. If you are managing the build yourself, the relevant date is the date that you declare to the mayor of your municipality for the start of construction.

Interest subsidies

You can request an interest subsidy to reduce your monthly mortgage repayments for the construction or purchase of your main, permanent residence.

Who is eligible? You may be eligible for the interest subsidy if you have signed a mortgage agreement with your bank and are not the owner of another property.

An other condition is that the home must be in Luxembourg, and be your main, permanent residence for at least two years. Your situation will then be reassessed every two years.

How much? Mortgages of up to EUR 200,000 are eligible for the interest subsidy. This amount increases by EUR 20,000 for each dependent child, up to a maximum of EUR 280,000. The interest rate subsidy depends on your income and the composition of your household. It ranges from 0.25% to 3.50%, but must be below the nominal interest rate on your loan.

How to take advantage of this? You must apply for an interest subsidy via the Single point of contact for housing assistance.

Savings premium

If you have saved enough to purchase or construct your home, you may be eligible for a savings premium.

Who is eligible? To benefit from the savings premium, you must be in receipt of the home ownership subsidy and invest at least 90% of the funds in your savings account to finance your home. You must also have been saving for at least one year in a savings account with the same bank.

The home must be your main, permanent residence for at least two years after the payment of the premium.

How much? The savings premium is a maximum of EUR 5,000 per beneficiary. This corresponds to 10% of the increase in savings per calendar year, with a maximum of EUR 500 per year over a maximum period of 10 years.

How to take advantage of the scheme? You must apply for this premium via the Single point of contact for housing assistance. You can apply for the savings premium at the same time as you request the home ownership subsidy.

Government guarantee

Banks require certain guarantees, such as a personal contribution or a mortgage on the property when granting a real estate loan. The Luxembourg government may, on certain conditions, help you guarantee your loan for the purchase or construction of your house or apartment.

Who is eligible? To benefit from the government guarantee, you must have been saving for at least three years in a bank savings account and the amount on this savings account must have risen by at least EUR 1,000 per year. You must also have obtained a loan from your bank for at least 60% of the total cost of the project. You must not be the owner of another property.

How much? The maximum government guarantee may not exceed EUR 294,824.40. In addition, the guarantee may not exceed 40% of the cost of your project.

How? Your bank will submit the request for a government guarantee directly.

Tax credit on notarial deeds (“Bëllegen Akt”)

The Luxembourg government grants a rebate referred to as a tax credit on notarial deeds, to reduce costs relating to the purchase of a home. This tax credit takes the form of a reduction of 3,5% in the registration and transcription fees (normal rate of 7%) for the purchase of a house, apartment or land for construction.

Who is eligible? Anyone purchasing a property can benefit from the “Bëllegen Akt” tax credit on notarial deeds in Luxembourg. However, you must undertake to occupy the home for a continuous period of at least two years.

How much? The tax credit is limited to EUR 30,000 per person. It can be used once or over time for other purchases in the future if the registration and transcription fees have not reached the maximum threshold on the first acquisition. The balance of the available tax credit on notarial deeds can be consulted online at MyGuichet.lu.

How to take advantage of the scheme The request for the tax credit is made by the notary when the notarial deed is signed.

Reduced VAT rate

The standard VAT rate in Luxembourg is 17%. The government applies a reduced rate of VAT to work on the construction or renovation of a home.

Who is eligible? If you buy or build your main residence, the state will grant a reduced VAT rate of 3% on the work.

How much? The total amount of this tax concession must not exceed EUR 50,000 per new home. To find out the amount of the tax concession remaining for your home, you can make an online request via MyGuichet.lu.

How to take advantage of the scheme? There are two potential solutions:

The person carrying out the work applies the reduced VAT rate directly.
Generally, the business or tradesperson (electrician, heating installer, etc.) carrying out the work will apply the reduced VAT rate directly. They will take the steps to obtain the relevant approvals.
Request for reimbursement.
If the reduced VAT rate has not been directly applied, you can request reimbursement of the VAT from the Luxembourg Registration Duties, Estates and VAT Authority (AED).

Credit protection insurance (ASRD)

ASRD covers your mortgage in the event of death or disability. It is valid throughout the term of the loan and insures all or part of the amount borrowed.

It is possible to deduct a part or all of the cost of ASRD for the purchase of a property for use as your main residence. The caps for the deductible amount may also be raised following the payment of a single premium as part of the conclusion of a temporary life insurance contract to guarantee the repayment of a loan (ASRD).

For example, the amount of this increase in the deductible ceiling is limited to the amount of the single premium but may not exceed EUR 6,000 up to the age of 30 per person.

Beyond the age of 30, flat-rate amounts are added based on age brackets, along with increased deductions of EUR 1,200 per dependent child in the household.

The level of the cap depends on your age, family situation and the number of children in your household.

Family situation	Up to 30 years of age	From 31 to 49 years of age	50 years of age and over
Single person	6,000	480/year	15,600
Couple with one dependent child	7,200	576/year	18,720
Couple with two dependent children	8,400	672 /year	21,840
Couple with three dependent children	9,600	768 /year	24,960

Are you looking to buy or renovate your home?

The Luxembourg government has also introduced a ‘Klimabonus’ to support the energy transition.

These subsidies cover items such as insulation, the replacement of windows, the replacement of a boiler, the installation of solar panels, etc.

Find out more

Info to know for 2025

Future buyers can still benefit from the registration fee reduction until 30/09/2025, provided that one of the following documents has been registered with the Registration Duties, Estates and VAT Authority (AED) no later than 30 June 2025:

either a signed sales agreement;
or a signed reservation contract for a VEFA sale.

The notarial deed must be signed between 1 July and 30 September 2025.

The extension of this conditional flexibility also applies to other tax measures for 2024:

the halving of the taxable base for registration and transcription duties;
the rental tax credit of EUR 20,000 per individual;
the accelerated depreciation of buildings acquired as rental investments;
the tax exemption of capital gains reinvested in properties with an A+ energy performance rating or in properties intended for social rental management.

However, the “Bellegen Akt” tax credit of EUR 20,000 per person for the acquisition of a home for personal use is extended beyond 30 June 2025.

The Luxembourg government has introduced a generous range of measures for those encountering difficulties setting up and purchasing a home in Luxembourg. Don’t miss out!

Feel free to contact your bank adviser to discuss these measures further. They will be able to offer guidance and assistance for your plans to purchase a home, ensuring that you take full advantage of the subsidies available for capital and interest payments. Start by opening a savings account to ensure your eligibility for the savings premium and the government guarantee.

The BGL BNP Paribas chroniclers 02/07/2025

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