Tax Super-Depreciation: The Government's Plan for New Rental Housing Building
A New Boost for Buy-to-Let Investment in Luxembourg
Faced with a restricted supply in the acquisition market that is weighing heavily on the rental sector, the Luxembourg government has decided to strengthen its fiscal levers [2]. The objective is clear: to attract private investors again to relaunch housing construction, particularly in high-demand areas such as Luxembourg City, Esch-sur-Alzette, or developing districts like Belval and Cloche d'Or.
Boosted Depreciation Rates for New Buildings
The flagship measure of this new legislative package concerns the implementation of a fiscal "super-depreciation." This scheme allows owners to deduct a larger fraction of the construction price from their taxable income each year.
According to recent announcements, depreciation rates are now staggered to encourage social diversity and affordable housing supply:
- 3.5% per year for new housing rented at intermediate rents [3].
- 4.5% per year for housing intended for social rental [3].
- Up to 5.5% per year in certain specific cases provided for by the bill to maximize the sector's attractiveness [5].
Offsetting Rental Deficits Against Global Income
Beyond the rates themselves, a major structural change has been introduced. The regime now allows the rental deficit — resulting from these high depreciations and expenses — to be offset against the landlord's global income [1].
This fiscal flexibility significantly improves the net profitability of real estate projects for taxpayers, whether they invest in modern apartments in Kirchberg or residences in Differdange. By reducing the overall tax base, the State hopes to compensate for the increase in construction costs and interest rates that had slowed down housing starts in recent months.
Strict Regulations for Social Housing
Alongside these incentives for owners, the government is strengthening the monitoring of the rental stock. For housing benefiting from specific conditions, the situation of tenants will be reviewed every six years [4].
If the occupants' income exceeds the legal ceilings, they will have to pay a "surplus rent" or vacate the premises [4]. This measure aims to ensure that public aid and tax advantages truly benefit the households that need them most, while ensuring fluid rotation in the social and affordable housing stock.
What Impact for Investors on Nextimmo?
For users of the Nextimmo platform, these measures mark a turning point. Buy-to-let investment is once again becoming a major strategic option in the Grand Duchy [3]. Nextimmo's partner agencies are already noting a resurgence of interest in off-plan (VEFA) projects, stimulated by this prospect of accelerated tax relief.
Sources
- Nouvelles mesures pour le logement au Luxembourg - Facebook
- RTL Infos - Facebook
- L'investissement locatif est-il toujours une option intéressante au Luxembourg ? - BIL
- Impôt à la mobilisation des terrains constructibles (IMOB) - RTL Infos
- Immobilier locatif : les règles d'assouplissement - Capital