A new law introducing several housing measures is set to take effect in June as the government aims to stimulate the market through a combination of fiscal and social initiatives, as well as both direct and structural aids.
Some components of the package have already been approved by the Chamber of Deputies last week, while others are still under development.
Impact on private individuals
The new law will bring several changes, particularly in fiscal measures.
For individuals purchasing a property as their primary residence, the threshold for notarial deeds related to property transactions, known as the "Bëllegen Akt," will increase. Currently, buyers can claim up to €30,000 on registration costs. This amount will now rise to €40,000, with the additional €10,000 claimable only for notarial deeds in 2024.
A new provision allows those purchasing property to rent out to also benefit from this measure. However, for these buyers, the threshold for registration cost claims is set at €20,000.
Additionally, a fiscal measure aimed at encouraging more housing availability involves reduced taxes on the value added for properties sold in 2024. This incentive mainly targets homes that are currently vacant, aiming to bring more properties onto the market.
Structural measures
The measure package aims to stimulate property investment in Luxembourg, with the goal of increasing the number of flats available on the market.
Structural changes include tax benefits. Owners who place their flats into social rental management will now benefit from a 90% tax exemption on the income generated, up from the previous 75%. Social rental management involves owners offering lower rent in exchange for these tax advantages.
Introduction of a rental bonus
A completely new measure includes a rental bonus that employers can offer employees under the age of 30. Employers can provide a bonus of up to €1,000 to help young employees pay their rent, with the company receiving a 25% tax exemption on this amount.
Upcoming social measures
For tenants, the threshold for applying for state aid will be increased, along with the maximum amount that can be paid out. For example, the aid per child will rise from €40 to €80. However, the closer a tenant's income is to the threshold, the less aid they will receive.
For homeowners, the subsidy on mortgage interest rates will be adjusted. The state will cover some of the costs that homeowners are currently facing due to high interest rates, with the new law providing coverage of up to 3.5%.
Expansion of eligibility for subsidised housing
More people will be able to purchase subsidised housing, which is offered at lower prices by the National Society for Affordable Housing (SNHBM) or the Housing Fund. These properties are cheaper because they are sold without the plot of land they are standing on.
The revenue threshold for eligibility has been increased, allowing more individuals and households with children to qualify for subsidised housing. This change aims to broaden the pool of potential buyers.
For example, the income threshold for an individual has been raised from €47,700 to €59,000 per year. For a family with two children, the threshold is now set at up to €135,600 net per year, which both partners may earn combined.
