Is a property owner allowed to rent their home to their child? The answer is yes! However, while it may be tempting to make some family arrangements, keep in mind that the law must always be followed. Here are the answers to the main questions parents may have when considering renting their property to their child.
Can I let my child live in my apartment for free?
Of course, you have the right to let your child live in an apartment you own free of charge. However, in this case, it is not considered a rental. This means that you will not be able to deduct rental expenses from your taxes.
Even though there are no tax benefits for providing free housing, this option remains attractive for the child, who can save money each month. For parents, this alternative avoids paying an extra rent, making it a win-win situation.
However, this choice may be financially disadvantageous if you are still paying off a loan on the property. In such a case, it might be better to continue renting it out so that the rent received helps cover part or all of your monthly loan repayment.
Am I allowed to charge my child rent?
While it is perfectly legal to allow your child to live in your property free of charge, you may also charge them rent, just as you would with any other tenant.
In this case, even though you are family and trust your child, it is best to draft a formal lease agreement and comply with all legal requirements for a rental property, whether furnished or unfurnished.
Can my child receive rental assistance if they live in my apartment?
Even if you draft a proper lease and your child pays you rent every month, they will not be eligible for rental assistance. This aid, ranging from €10 to €520 depending on household composition, is designed to help low-income families access decent housing.
It is available to any adult resident of Luxembourg or individuals with a residence permit for more than three months at the time of application. Among other eligibility criteria, the administration specifies that the apartment must not be rented from a parent, child, or public entity.
Can my child receive state assistance for a rental guarantee?
When signing a lease for an apartment or house you rent to your child, you can request a rental guarantee. To finance this guarantee, tenants can rely on assistance from the Ministry of Housing and Territorial Planning.
Specifically, the ministry can finance the rental guarantee, provided the tenant agrees to save the total amount over a period of three years.
Again, the same conditions apply as with rental assistance: this aid cannot be granted to individuals renting a home from their parents, children, or a public organization.
“Although it is entirely legal to rent your property to your child, this decision excludes them from many financial aids and may ultimately be more costly.”
Thus, while renting to your child is legally allowed, it may end up being more expensive than seeking another rental option. However, if you own a fully paid-off property and do not need rental income, providing free housing could be a smart financial decision to save money.
