Luxembourg has an excellent reputation in Europe both in terms of quality of life and its advantageous taxation. Investing in real estate in Luxembourg is therefore a good idea for those who want to make a safe investment.
An attractive country for high-potential investment
Luxembourg's economy is thriving, which attracts many investors. The country is among the richest in the world and the unemployment rate is low. With a constantly growing population and the presence of cross-border workers, rental demand is always increasing. Investing in real estate in Luxembourg allows you to generate regular income while building up wealth that can be passed on to your descendants
If you want to buy a property in Luxembourg, know that the prices are high and that your budget must be substantial. Like many other European capitals, Luxembourg remains the most expensive city in the Grand Duchy. To invest in a new quality apartment, call on Sonntag-Immobilien, your real estate developer in Luxembourg
What is the tax on real estate in Luxembourg?
Notary fees include all the costs related to a real estate acquisition, paid in the hands of the notary.
Taxes due to the Tax Administration
• Recording and transcription fees
The normal rate for acquisitions for consideration of a building (house, apartment, building land) is 7%, including 6% registration fees and 1% transcription fees, calculated on the price of the land and any constructions carried out.
There are several cases depending on the place of residence and the use of the property purchased:
• The buyer domiciled in Luxembourg and planning to live in the building himself benefits from registration and transcription fees at the flat rate of €100 if these fees – namely 7% calculated on the amount of the land and buildings possibly realized – do not exceed the tax credit of €20,000 granted per person (see point D. Bellegenakt below);
• The buyer not domiciled in Luxembourg and planning to live in the building himself will have to advance the registration and transcription fees, but may recover them later by sending the notary a certificate of residence proving that he is indeed domiciled in the acquired accommodation;
• The buyer who plans to rent his apartment does not benefit from a tax credit and will have to pay the full registration and transcription fees, namely 7% calculated on the amount of the land and any constructions carried out .
This amount corresponds to the reimbursement of any costs incurred by the notary in relation to the property acquisition, for example the costs relating to the request for cadastral extracts, obtaining certain administrative documents from the syndic of co-ownership, administrations, etc. .
Notarial fees and emoluments
This is the remuneration of the notary, fixed by Grand-Ducal regulation. It corresponds to approximately 1% of the price of the land and any constructions carried out.
This is a real surety relating to real estate and which guarantees the repayment of the sum borrowed.
The notary is responsible for drawing up the conventional mortgage deed, which generates notary fees to be taken into account.
For the mortgage to be enforceable against third parties (i.e. any creditors of the future owner), it must be registered with one of the mortgage offices in Luxembourg.
Example: for a property purchased worth 400,000.-€, it will be necessary to count around 2,700.-€ in mortgage costs (registration and registration fees and notary fees).
In the event of the sale of the property before the term of the mortgage, the seller must obtain the release of this mortgage. This formality requires a new notarial deed and therefore additional costs.
Outstanding balance insurance
The credit institution generally requires outstanding balance insurance which covers the balance to be repaid in the event of the premature death of the borrower.
Bëllegen Akt” or tax credit
In order to reduce the ancillary costs of buying a home, the government has introduced an allowance, called a tax credit, on registration and transcription fees (also called “Bëllegen Akt”) for buyers of an immovable for personal residential purposes.
This tax credit is limited to €20,000 per purchaser. For a couple, this amount is doubled.
The Administration of registration and domains will in all cases collect a minimum amount of 100.-€ as a registration fee.
The purchaser must actually and personally occupy the accommodation within 2 years from the date of the notarial deed of acquisition and must undertake to occupy the building for an uninterrupted period of at least 2 years for the buildings acquired after January 1, 2008.
Another tax gift, the property tax in Luxembourg is very low and there is no tax on real estate capital gains in case of sale of a main residence. Finally, interest on mortgage loans is tax deductible, up to 10,000 euros deductible each year for a couple for example. In the case of an expatriation in Luxembourg, even for a few years, you have every interest in becoming an owner rather than considering renting.