Residential real estate: new government measures that you can only benefit from in 2024

The Luxembourg government coalition has made the housing crisis one of its priorities. Less than three months after its formation, the executive announced a set of new measures aimed at relaunching a residential real estate market which, for several months, has been virtually at a standstill. Due to the rise in interest rates, many individuals or investors have had to abandon their acquisition plans. For the government, the challenge is both to allow everyone to have access to housing, but also to support the construction sector, whose jobs are today threatened due to the drop in activity. It is with this in mind that the authorities have just announced a set of measures, some of which will only produce their effects in 2024.

Tax credit of 30,000 to 40,000 euros per person on notary fees

 Having no power over bank rates, the government has considered a package of aid to support access to property or even facilitate investment. One of the main announcements concerns the strengthening of the tax credit ( Bëllegen Akt ) on notarial deeds. Until then, it amounted to 30,000 euros per person for owner-occupiers. It is now 40,000 euros per person for acquisitions made during 2024.

Those who invest in new residential real estate as an individual in order to offer rental housing will also be able to access this tax credit up to 20,000 euros per person. To be able to benefit from it, however, the acts must also be signed in 2024.

A tax rate on real estate capital gains which increases to a quarter of the overall rate in the event of the sale of a property other than the main residence for the year 2024

Another measure adopted: the tax rate on capital gains made on the sale of real estate recorded in 2024 will be reduced to a quarter of the overall rate (instead of half the overall rate). To be considered as a sale profit and not as a speculation profit taxable at the normal rate, the interval between the acquisition and the sale must exceed two years. The idea with this measure is to reactivate the market. Through this advantageous tax rate, the aim is to encourage investors to renew their real estate portfolio by selling rental properties that they hold in 2024 and to invite them to reinvest in new properties.
From 2025, the tax rate will return to half the overall rate and the two-year holding period to not be considered as speculation profit will increase to 5 years.

In addition, investment is more supported. The depreciation rate has increased from 5 to 6% for assets registered in 2024, and the duration over which we can benefit from it also increases, from 5 to 6 years.

For new owner-occupiers of a new property, the ceiling on deductible interest has been raised, going from 3,000 to 4,000 euros per year and per person in the household for the year of occupation and the following 5 years, and this starting in fiscal year 2024.

Find a property to take advantage of these benefits

For players who wish to benefit from these measures, and in particular those which will only produce their effects in 2024, the challenge is to find quality investment opportunities. Some developers remained active and continued to offer real estate programs. CBRE is mandated on several new real estate developments, most of which are currently under construction.

In this context, our role will be to support investors in bringing new projects to fruition by taking advantage of the benefits resulting from government measures.