Renting your home is often a natural choice when relocating to a new country.
This seems even more obvious when considering the high property prices in the country. However, some specific elements should incentivise you to quickly become homeowner in Luxembourg, even if you are only considering living several years in Luxembourg! Here are Nexvia’s 8 top reasons why!
1. Acquisition costs are limited
Registration fees are reduced to €100 (Bëllegen Akt) for any purchase up to €285,714 for a single person or €571,428 for a couple. Above this threshold, you will pay 7% of the property price, which is low compared to other European countries. Moreover, notary fees are relatively limited on the transfer of ownership.
2. Property tax is practically non-existent
In comparison to other neighbouring countries, property tax is very low in Luxembourg (more or less €150 for a €500,000 apartment in Luxembourg city). Being owner does therefore not generate a significant tax pressure that might justify remaining a tenant.
3. Capital gain is tax-exempt
The potential capital gain realised on the sale of the primary residence is non-taxable, whatever the amount might be.
4. Mortgage interests are tax-deductible
A couple can annually deduct up to €10,000 of mortgage interests from its taxable revenues (+ €2,000 per child). The deductibility of the mortgage interests results in an attractive net mortgage cost in relation to the renting cost.
5. A significant growth potential
With a strong track record and a forecast of 4% annual growth in GDP, the Luxembourg economic development surpasses the performance of its neighbours.
6. A steady increase of the population
With a 24.8% growth in 10 years (average EU 2.5%)1 the increase in population results in a surge in housing demand. This growth isn’t showing signs of slowing down just yet.
7. An insufficient number of new constructions
The annual deficit in new homes is estimated to reach 2,500 units based on the number of delivery of new property.
8. A historical resilience in case of crises
Property prices have been only marginally impacted by the 2008 financial crisis (1% decrease in 2009 followed by a steady increase of +/- 5% since 2010). Even if this does not guarantee complete security, it shows a certain strength of the local market.
Still not convinced? Try Nexvia’s buy or rent tool, which allows you to see how many years it takes for your acquisition to be profitable (spoiler alert: it is usually less than 3 years).
 World Bank (2017)
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