{"id":396,"date":"2017-02-15T16:28:20","date_gmt":"2017-02-15T15:28:20","guid":{"rendered":"https:\/\/my-life.lu\/2017\/06\/14\/votre-projet-immobilier-au-luxembourg%e2%80%af-comment-profiter-au-mieux-des-avantages-fiscaux-disponibles%e2%80%af\/"},"modified":"2019-04-12T14:48:33","modified_gmt":"2019-04-12T12:48:33","slug":"your-real-estate-project-in-luxembourg-how-to-make-the-most-out-of-the-available-tax-advantages-10001","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/your-real-estate-project-in-luxembourg-how-to-make-the-most-out-of-the-available-tax-advantages-10001\/","title":{"rendered":"Your real estate project in Luxembourg: How to make the most out of the available tax advantages"},"content":{"rendered":"
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While it is obvious that we invest not primarily in real estate to optimise taxes, certain tax provisions make it possible to significantly minimise the real cost of acquisition or investment. At the condition to know them and make your decisions accordingly.<\/p>\n

Whether it is a question of no longer paying rent or a patrimonial strategy, the choice of investing in real estate<\/a><\/strong><\/span> generally goes beyond the question of tax advantages alone. This being so, no one is against some advice to optimise one\u2019s situation.<\/p>\n

The acquisition of your primary residence<\/h2>\n

Optimisation for the primary residence may concern the down payment, the type of purchase, the insurance and the contracted loan. At the condition to complete a tax return.<\/p>\n

(\u2026) Optimisation for the primary residence may concern the down payment, the type of purchase, the insurance and the contracted loan.<\/p><\/blockquote>\n

The down payment<\/strong><\/p>\n

By deciding to contribute to a home savings plan, you benefit from a deductibility of the contributions up to \u20ac1,344 per person in the tax household (of less than 40 years old, otherwise \u20ac672).<\/p>\n

Imagine that you have set aside \u20ac4,032 via your home savings plan to build up your down payment. Considering that you have a child and that you are subject to the marginal tax rate of 41.73% (applicable for people with annual income above \u20ac45,897), these \u20ac4,032 will in reality cost you only \u20ac2,349.<\/p>\n

The type of purchase<\/strong><\/p>\n

Purchasing off-plan can enable you to significantly reduce your registration fees. These are calculated only on the land share of the property (generally representing between 35% and 40% of the total purchase price in Luxembourg City). A benefit that needs to be mitigated for a first purchase since the registration tax credit (B\u00ebllegen Akt) allows you to pay almost no registration fees for the purchase of an existing property (up to \u20ac285,714 for a single and \u20ac571,428 for a couple).<\/p>\n

\"\"<\/a>An off-plan purchase of your primary residence<\/span><\/a><\/strong> allows you to benefit from the super reduced VAT rate of 3% on the property\u2019s construction share up to \u20ac357,143, representing a tax benefit of \u20ac50.000. Please remember that unless you transfer it to an owner-occupant, you must repay this VAT-reduction if you resell your new property before having lived there for two years.<\/p>\n

The insurances<\/strong><\/p>\n

At the time of purchase, your bank systematically requests to subscribe to a mortgage insurance to cover any risk of death or incapacity of the borrower. Although single premium insurance is a very significant additional expense compared to an annual premium one, its real costs are heavily reduced through their deductibility, in most cases entirely. In general, the single premium only costs you 58% of its price!<\/p>\n

In comparison, annual premiums are mixed up with all other insurance premiums you pay (e.g. life, death, disability, accident, sickness, civil liability) and with the interests on non-mortgage loans. This group is deductible only up to \u20ac672 per person of the tax household and per year. Not only are you not sure that you can fully deduct these annual premiums, but you are also deprived of the possibility of using other tax deductible products such as life insurance.<\/p>\n

The mortgage<\/strong><\/p>\n

Even if you could allocate a large down payment, get a loan to finance your acquisition and benefit from the interest deductibility (\u20ac2,000 per person in the tax household for the first six years of occupation, \u20ac1,500 for the next five years and \u20ac1,000 for the following). Adding to low interest rates, these interest deductions generally allow an effective loan rate often close to 1%! And if your employer applies the interest subsidy, you get \u20ac3,000 extra deductible interests per person (excluding children). For a couple with a child, this represents an annual deduction of \u20ac12,000 of mortgage interests!<\/p>\n

Buy-to-let investment<\/h2>\n

Regarding a buy-to-let investment<\/a><\/strong><\/span>, in addition to advising taking a loan due to the unrestricted deductibility of interests on net rental income, your optimisation is intimately linked to the envisaged type of property. On this point, two types of properties are of particular interest to the investor: a property purchased off-plan or a property over 60 years in need of renovation.<\/p>\n

(\u2026) two types of properties are of particular interest to the investor: a property purchased off-plan or a property over 60 years in need of renovation.<\/p><\/blockquote>\n

Off-plan property<\/strong><\/p>\n

For such a purchase, you benefit from:<\/p>\n