New boost for property purchases in Luxembourg: €30,000 tax credit !

Good news for anyone considering buying a property in Luxembourg. Registration and transaction fees, often seen as a burden, can now be offset by a more generous tax credit. In fact, the amount of this tax credit has been increased from €20,000 to €30,000, an initiative that will provide a significant boost to potential buyers.

The measure, known as the "Bëllegen Act", was adopted in tripartite talks between the government, trade unions and employers, with the aim of combating inflation and the rising cost of living. The law was passed by the Chamber of Deputies on 25 April and has been in force since the beginning of the month.

It should be noted, however, that this tax credit is only available to buyers who are purchasing their primary residence. Investors and those buying a second or holiday home are excluded. In addition, each buyer can only benefit from this tax credit once, until the amount is exhausted.

However, the credit is transferable if the buyer decides to buy another property at a later date. However, the buyer must live in the purchased property for at least two years without interruption and may not rent out any part of the property. If these rules are broken, the tax credit must be repaid to the government.

For a couple buying a property together, the tax credit under the new rules amounts to 60,000 euros, an increase of 33% compared to the previous regime.

These measures come at a time when the Luxembourg property market is experiencing a slowdown as a result of rising interest rates. Despite an overall price increase of 9.6% last year, the last few months of 2022 saw prices fall for the first time in eight years. The volume of transactions fell in 2022, with the number of sales down 14.4% on the previous year. This has put additional pressure on the real estate sector, which fears a wave of redundancies following the government's decision not to intervene with financial support.

Among other notable measures adopted at the tripartite meeting in March was an increase in the tax-free amount of mortgage interest from 2,000 to 3,000 euros. Another tax credit, the CIC, aimed at ensuring that more of the wage indexation remains in the pockets of citizens, is still in the works. Another tax credit, the CIC, aimed at ensuring that more of the wage indexation remains in the pockets of citizens, is still awaiting approval by the Chamber of Deputies.

In summary, these recent changes should help provide relief to shoppers in the current inflationary and high cost of living environment. It remains to be seen how these new measures will affect the development of the Luxembourg property market in the coming months.

Keywords: tax credit, property purchase, Luxembourg, registration fees, transaction fees, Bëllegen Act, Luxembourg property market, inflation, cost of living.