Homeowners: what support is available for you?

If you have decided to build, buy or renovate your home, you are eligible for financial support from the Luxembourg government to help with your project. This is especially relevant thanks to the stimulus package voted through by the government in May 2024! myLIFE provides an overview of the various subsidies available for homeowners.

Are you thinking of building or buying your home in the near future? Do you plan renovation work to improve your existing home? The government offers several types of financial support for owners in the Grand Duchy to build, buy or renovate their homes.

These may take the form of direct capital subsidies, help with interest on a loan repayment, support in connection with sustainable housing and energy efficiency measures, or tax incentives.

Useful info: the system is more generous and available to more people following the reform of individual housing support schemes which came into effect in September 2023 and the stimulus package that was approved in May 2024. Some subsidies and revenue caps have been increased and the eligibility requirements have been simplified in order to include a greater number of people (in particular families with children).

The tax credit on notarial deeds (Bëllegen Akt) represents €40,000 per buyer for 2024

Tax benefits

There are a number of indirect housing subsidies available in Luxembourg, in particular, tax benefits related to the acquisition, construction or renovation of your home. Here are a few of the main benefits:

• • Tax credit on notarial deeds (Bëllegen Akt): you can request a rebate on registration and transcription fees when you purchase a property (housing for use as your main residence, some outbuildings and constructible land). This tax credit represents EUR 40,000 per buyer for 2024 (notarised deed signed between 1 January 2024 and 31 December 2024). In addition, a temporary tax credit has been introduced for rental property buyers for 2024. This amount is €20,000 per individual (€40,000 for a couple), and only concerns off-plan sales (vente en état de futur d’achèvement – VEFA).

• • Housing or super-reduced value added tax: construction and renovation work on your home may, subject to conditions, qualify for the super-reduced VAT rate of 3%, provided the property is used as your main residence. The tax benefit is capped at EUR 50,000 per home.

• • Interest payable: interest payable on a mortgage taken out to finance the purchase or construction of your main residence may, subject to certain conditions, be deductible from your income as expenses. As part of the housing stimulus package, the deduction thresholds for the interest payable have been increased by one third.

• • Mortgage insurance: if you subscribe for mortgage insurance to guarantee the repayment of a loan for the acquisition, construction, extension, transformation or renovation of your residence, your subscriptions are tax deductible up to an amount of EUR 672 per person per year. However, if you decide to pay your mortgage insurance via a single premium, the maximum tax relief threshold may be raised to reflect your age and the composition of your household.

• • Mortgage savings schemes: the aim is to enable you to access a loan on beneficial terms to finance your main residence (construction, acquisition, transformation). Contributions paid into an approved home savings plan may, subject to certain conditions, be tax deductible as special expenditure.

Support for homeownership and renovation

Government guarantee

In principle, banks require a guarantee for a loan to buy, build, improve, transform or renovate housing. If your guarantees are insufficient, the government may guarantee part of your mortgage, subject to certain conditions. With the introduction of the housing stimulus package, the maximum level of a government guarantee in relation to the cost of the project has been increased to 40%.

Homeownership subsidy

You may be eligible for a homeownership subsidy once you have been granted a mortgage to buy or construct your home, depending on your income level and the composition of your household. This subsidy rises by 15% if your home is semi-detached and by 40% if it is a condominium or a terraced house.

Useful info: subject to conditions, this subsidy may be increased by a cost-of-living subsidy of EUR 20,000 for a new build (housing planned for construction, in construction or completed but not yet inhabited on 1 September 2023) and for property for which the notarial deed of sale is dated between September 2023 and 31 December 2024.

Savings premium

If you have saved to acquire or construct your home and are eligible for a homeownership subsidy, you can request a savings premium. This adds an additional 10% to your annual savings on the savings account used to finance your home. It is restricted to EUR 5,000 (EUR 500 per year over a maximum 10-year period). You must use at least 90% of the money on your savings account to finance your home.

Interest relief

Subject to conditions, the government may grant interest relief to reduce the monthly payments on your loan to buy, construct or renovate your home. The interest relief is set on the basis of the terms of your loan, and depends on your income and the composition of your household. The maximum level of assistance has been reviewed and increased to 3.5% since the introduction of the housing stimulus package.

Renovation subsidy

Eligibility for this subsidy also depends on your income and the composition of your household. It represents a maximum of 40% of the work invoiced for the renovation or transformation of your home (excluding embellishment or ongoing maintenance work).

One of the conditions is that the work must be carried out in housing inhabited for over 10 years. For example, a renovation subsidy can be requested for reroofing, installing or updating central heating, installing or replacing shutters, etc.

Subsidy for adaptations to meet the special needs of people with disabilities

People with disabilities (or their legal representatives) can request this subsidy for special adaptations that have been carried out and are not covered by long-term care insurance: work carried out to facilitate access to the home or movement within the home, such as widening doors, installing specific equipment in the kitchen, bathroom or toilet, etc.

This subsidy is granted, subject to conditions, and may cover up to 60% of the work invoiced excluding VAT; it is capped at EUR 20,000 for a person with disabilities.

A subsidy of EUR 10,000 may be granted, subject to certain conditions, for the creation of an annexe or “granny flat” within a single-family home.

Subsidy for the creation of an annexe

This subsidy of EUR 10,000 may be granted, subject to certain conditions, for the creation of an annexe or “granny flat” within a single-family home. You must get building permission from the competent local authority and live in one of the two housing units after completion of the work.

Useful info: the subsidy may reach EUR 20,000 for an annexe occupied for the first time after September 2023 and completed prior to 31 December 2026.

Subsidies for energy efficiency renovations

Government guarantee for a climate loan

If you plan to request a loan to carry out energy efficiency improvements on a property used as housing (by you or another owner) for over 10 years, or to install up-to-date technical equipment, you may, subject to conditions, be eligible for a government guarantee for a climate loan. The guarantee covers the principal amount of the loan, up to EUR 50,000 over 15 years.

Interest relief for a climate loan

You can also reduce the interest burden on your loan with interest relief for a climate loan. If you obtain a financial subsidy for sustainability and renewable energy improvements to your home, you may, subject to certain conditions, receive a reduction of 1.5% on the interest rate payable on the full amount of the loan. This reduction may not be higher than the standard interest rate for the loan. The amount of the reduction therefore corresponds to the eligible fees that you are required to pay for the work. However, this reduction may not exceed EUR 100,000 and you are eligible for a maximum period of 15 years.

The Klimabonus programme is gradually replacing the PRIMe House subsidies scheme for any requests made from 2022.

Klimabonus subsidies

The Klimabonus programme of subsidies of the Ministry of the Environment, Climate and Sustainable Development is granted for an energy retrofit of a building or part of its thermal shell (insulation of the roof, an exterior wall or foundations, installation of a ventilation system, the replacement of windows, etc.), for the use of renewable energy sources (heat pump, solar power, etc.) or for the construction of a sustainable home.

Useful info: low-income households may receive an improvements subsidy for energy efficiency renovation work (Topup Klimabonus) which may represent up to 100% of the Klimabonus subsidy.

N.B.: the Klimabonus programme is gradually replacing the PRIMe House subsidies scheme for any requests made from 2022.

Financial assistance for LENOZ certification

You can request support from the Housing ministry if your home has been awarded LENOZ (Lëtzebuerger Nohaltegkeets-Zertifizéierung fir Wunngebaier) certification – Luxembourg sustainability certification.

Other subsidies in connection with energy savings and renewable energies

Government subsidies for energy efficiency renovations to a home can be combined with:

• • additional support and subsidies offered by some Luxembourg municipalities (contact your municipality directly);
  • the enoprimes subsidies granted by energy suppliers in Luxembourg; and
  • the fonds nova naturstroum subsidies that promote sustainable development in Luxembourg.

Find the details of these different types of financial support, the eligibility requirements and a subsidy simulation tool on the website www.klima-agence.lu.

For more information on individual housing support in Luxembourg, please speak to the Single point of contact for housing assistance.

This article presents the main housing subsidies granted by the Luxembourg government (the list is non-exhaustive). They may vary in line with changes to the law and regulations. Find out more!