Accession of real estate: what assistance for buyers?

Acquisition immobilière

From financial assistance granted by the State to small tax incentives, there are several levers favouring the purchase of real estate in Luxembourg. In order to know the most relevant alternatives in your own situation, the ideal remains to ask for the advice of a real estate agent, who will provide you with his expertise after having analysed your particular case. However, you can already find out about the main existing aids, which are summarized here in a few lines.

The acquisition premium upgraded in several cases

This capital assistance, which may vary between €250 and €9,700, is paid directly by the State, subject to income conditions (and depending on the family situation of the purchaser). Valid for both a house and an apartment, this premium is increased in certain particular contexts:

– 30% for a condominium or row house

– 15% for a semi-detached house

Among the various conditions necessary to benefit from this assistance, it is important to know that you must take out a mortgage, respect the income limits and use the dwelling as your main residence. The premium will be refused if you are already a home owner or usufructuary.

“The buyer must take out a mortgage, respect the income limits and use the property as his/her principal residence.”

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Bonus and interest subsidy: two cumulative levers!

Under certain conditions, you can count on two aids related to your loan: the bonus and the interest subsidy. To begin with, the bonus entitles you to an interest rate reduction of 0.50% per dependent child. For its part, the interest subsidy lowers the monthly cost to the family of paying off the mortgage. Its rate can vary from 0.575% to 2.45%, depending on the buyer’s resources.

In order to obtain these benefits, the future owner must provide a complete file to the Housing Assistance Department. For the interest subsidy, which lasts throughout the repayment of the loan, a review is scheduled every 2 years, depending on the beneficiary’s situation (the rate may be increased or reduced).

The savings premium: a capital aid for savers

If you have saved for at least three years before your purchase and you already benefit from an acquisition premium (or generalised home ownership savings assistance), you are eligible for the savings premium, which can reach €5,000. The amount is calculated based on the interest and premiums on your savings account at the time you obtain the loan.

The State guarantee: a boost for the mortgage loan

As you know, any borrowing requires strong guarantees. If you cannot make a sufficiently large contribution and if you cannot mortgage an asset, the State can guarantee your loan. To get this boost, you must have a home savings account that has been regularly funded for at least three years, but also make sure that the monthly loan payments do not exceed 40% of your income. Finally, this guarantee must relate to a loan financing 60% of the minimum project cost.

“If you cannot make a sufficiently large contribution and you do not have the opportunity to mortgage an asset, the government can guarantee your loan. ”

Several aids to reduce taxes and encourage purchase

If you are looking to build or renovate a dwelling to use as your main residence, you are entitled to a VAT rate of 3% – knowing that it is normally at 17%. This favour is granted up to a maximum of €50,000 per construction or renovation.

In addition, to reduce the weight of “ancillary costs”, you can claim a tax credit on notary fees (registration fees, in particular). This assistance is very welcome, given that these costs represent up to 7% of the investment (6% for registration fees, 1% for transcription fees).

In order to know all the aids you can count on depending on your situation, expose your project to a real estate professional. He will guide you to optimize the financing of your acquisition.

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