According to Statec, more than two thirds of Luxembourg residents own their homes. If this is not yet your case, here are five arguments to convince you that, beyond the pleasure of owning one’s home, investing in such is one of the first investments to be made.
Considering the mortgage interest deductions (and the interest subsidy if you are eligible), you can today benefit from a real cost of mortgage interest close to 1% on your entire repayment period via a fixed rate loan. On the other side, the annual rental costs represent between 2.5% and 4% of the property’s price. By purchasing your home, you save about 70% of your housing costs. Costs that are directly invested in the repayment of the property.
Since housing is a primary need, one of the missions of financial institutions is to facilitate access to housing and finance its acquisition. Buying your home often requires only 20% of the price of the property or less, if you have a comfortable income. The initial investment is therefore low compared to the advantages you will benefit from:
For first-time buyers, acquisition costs are generally very low. Indeed, 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 (instead of 7% of the price of the property, however applicable on the upper edges). It should be added to this the notary fees which are relatively limited on the transfer of ownership. For example, for a couple buying a property for €500,000, total transaction costs (including the financing costs) represent just over 1.2% of the price of the property! Click here to simulate your acquisition costs.
For first-time buyers, acquisition costs are generally very low.
In comparison with some neighbouring countries, property taxes are practically non-existent in Luxembourg. The annual property tax often amounts to less than €100 for an apartment. Being owner does therefore not generate a significant tax pressure that might justify remaining a tenant.
Whether it is to buy a new home in Luxembourg, to move to another country or to dispose of your own funds for another project, the potential capital gain realised on the sale of your primary residence is non-taxable. Whatever the amount might be.
Whatever your reasons for investing in real estate are, the last advice is to be accompanied by a professional capable of answering all your questions, including on finances and taxes.
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