What type of property to buy for a rental investment in Luxembourg?

Rudolphe ABENRudolphe ABEN - NEXTIMMO.LU

Rudolphe ABEN

What type of property to buy for a rental investment in Luxembourg?

Many people are contemplating investing in rental property in Luxembourg, which is not just for the very wealthy, because interest rates on real estate loans remain attractive and the simple fact of receiving rent makes it easy to repay the monthly payments. Of course, even before committing to a purchase, the question of what kind of property to buy arises. How do you know which apartment to choose will yield a quick return on investment? This is the recommendation of our group.

Consult a service provider about purchasing a Luxembourg rental property

Real estate investment in Luxembourg can be difficult if you are not an expert in the field and do not know all of the ins and outs involved. Making this dream a reality with the aid of an expert firm will ensure that you make a wise investment that will bring you success and help you accomplish your goals (invest your money safely, prepare for your retirement or optimize your taxes).

Identify a home that will help you achieve your goals

You can expect a difference in the purchase price of a home in Luxembourg City based on its age.

  • Value Estimate for Future Availability (VEFA) on Schedule
  • Greater than six years old
  • Over the age of 60

For instance, only the portion of the registration fee that applies to your portion of the land is due under a VEFA. Those looking to minimize their tax liability should prioritize purchasing a newly constructed home. The purchase of a property older than 60 years can be appealing for those with a high tax burden. The next step is to begin the required renovations in order to increase the property's value and qualify for certain tax deductions.

“Those looking to save money on taxes might consider investing in a building that is at least 60 years old”.

Pick a place that is "bare" or one that is "furnished"

Furnished rentals in Luxembourg City, like elsewhere, are always more expensive. The tenant need not worry about buying a bed, storage furniture, or kitchen equipment because all of that is supplied. The initial outlay may be high due to the necessity of new purchases, but the higher rental income will quickly cover those costs.

However, renting an apartment or house without furniture is a safer bet if you don't want to constantly be on the lookout for new tenants. In this arrangement, rental vacancies are relatively unimportant. Furnished housing, on the other hand, is popular primarily among tourists and short-term visitors. Thus, they call for a higher level of management effort. You can also contact a real estate agency in Luxembourg for the rental, and they will handle all the necessary paperwork and management on your behalf.