Real Estate Reform: Luxembourg Passes New Land Mobilization Tax Law
A Turning Point for Luxembourg's Housing Policy
This marks a historic milestone for the Luxembourg real estate market. The Chamber of Deputies has taken a decisive step in the fight against land hoarding. The new bill, spearheaded by Minister of Home Affairs Léon Gloden (CSV) and Minister of Housing Claude Meisch (DP), aims to modernize a tax system whose calculation bases had not changed since 1941 [3].
This reform, awaited for decades with motions passed unsuccessfully in 2003, 2013, and 2018, builds upon the work initiated by the previous government in October 2022 [3]. The primary objective is clear: to accelerate housing production by incentivizing landowners to mobilize their developable land.
The Land Mobilization Tax (IMOB)
The legislation introduces the Tax on the Mobilization of Developable Land (IMOB). This mechanism is seen as an essential tool for addressing the housing shortage in the Grand Duchy [3]. Unlike the current system, IMOB specifically targets serviced plots that remain unexploited, aiming to put an end to passive land speculation.
This mechanism arrives as the government also seeks to simplify property management, notably by authorizing mayors to exempt certain real estate professionals, such as agencies, from the rental permit in specific cases [2].
Taxing Vacant Housing: A Split Dossier
While land mobilization is at the heart of the current vote, the component concerning the tax on vacant homes (INOL - Impôt sur la non-occupation de logements) presents greater administrative complexities. To avoid delaying the entire reform, the government has chosen to prioritize land mobilization, postponing the technical implementation of the vacancy tax to a later stage [3].
It is worth noting that the management of vacancy and secondary residences is already a subject of discussion elsewhere in Europe, with mixed results on the amounts collected, illustrating the difficulty of setting an effective taxation threshold [4].
What Changes for Municipalities and Owners
From now on, municipalities will have more direct levers at their disposal. It is they who will decide on the application of the new tax rates [3]. Simultaneously, in a global tax simplification effort started since 2018, certain taxes like the housing tax (taxe d'habitation) have been gradually abolished to ease the burden on resident occupants [1].
This real estate reform is part of a broader ambition to rationalize the real estate park and improve access to housing for all workers, including those in the public sector who face increasing housing difficulties [5][6].
Sources
- Tax on the mobilization of developable land (IMOB) - Facebook
- Exemption from rental permit - Instagram
- Allez, construisons ! - Lëtzebuerger Land
- Secondary residences and vacant housing - Facebook
- Modernizing heritage management - Senate
- Access to housing for workers - Instagram