It is possible to obtain state aid in the form of a lump-sum capital payment to purchase or construct a dwelling (single-family home or apartment). The amount of the subsidy is determined according to the applicant's income and family status and ranges from EUR 250 to EUR 9,700. If the dwelling in question is a commonhold flat or a rowhouse, the subsidy is increased by 30 %. If it is a twin house, the subsidy is increased by 15 %.

Construction subsidies are only granted if the beneficiary is the first occupant of the dwelling. Otherwise, only purchase subsidies may be granted. However, the purchase of a dwelling followed by substantial works (structural works or works to replace fittings requiring an investment of at least 50 % of the purchase price) is considered as new construction.

The purchase or construction subsidy can only be granted once to the same beneficiary. The subsidy is paid for the beneficiary to the institution that granted the mortgage loan to finance the dwelling.

Some communes in the Grand-Duchy of Luxembourg promote home ownership through capital allocations. In most cases, these aids are linked to the conditions for granting government subsidies. Consequently, interested parties should contact their communal administration office for further information.

 

The eTracking function for hardcopy (paper) forms is a feature of this process. This feature enables users to stay informed about the advancement of their applications by email and/or by SMS.

Who is concerned

Any person who has contracted a mortgage loan for the purchase of an existing dwelling, or the construction of a new dwelling, located in Luxembourg, which dwelling is used as a primary and permanent residence by that person, their spouse, their ascendants and/or their descendants, as well as those of their spouse, living in the same household, may apply for a purchase or construction subsidy.

Prerequisites

A borrower who wishes to receive a purchase/construction subsidy from the State must:

• be authorised to legally reside in Luxembourg, be domiciled there, and effectively live there;
• have contracted a mortgage loan from an approved financial establishment in the European Union and in the European Economic Area (EEA), or from a social security-related pension institution, to purchase or construct a dwelling located in the Grand-Duchy of Luxembourg that will be used by the applicant's household as their effective primary and permanent dwelling for at least 10 years;
• satisfy certain income—and family status—related conditions;
• be neither the owner of, nor the holder of a right to use another dwelling in Luxembourg or in a foreign country;
• comply with the following useful residential floor space criteria:
  • single-family residence: between 65 m² and 140 m²;
  • flat: between 45 m² and 120 m².

These surface areas may be increased:

• 20 m² for each dependent child of the applicant starting from the 3^rd;
• 20 m² for any 1^st degree ascendant of the applicant, and any disabled person living in the beneficiary's dwelling, from the 5^th person residing there, on condition that said person is not themselves the owner of a dwelling.

The above-mentioned floor space dimensions do not include cellars, attics, garages, or common areas in commonhold buildings.

Workshops, commercial areas and other outbuildings used for professional purposes are excluded up to a maximum of 20 m². However, lofts or spaces that could be used as a loft are included, but only on condition that the height of the loft is at least 2 meters and that it has a normal access and a total window surface exceeding 0.375 m².

In some social cases, the Minister may waive the condition of minimum useful residential surface area.

It should be noted that no transformation that would lead to the useful residential floor space being exceeded may be made for 10 years from the moment the dwelling is occupied, failing which the subsidy may have to be reimbursed.

For buildings constructed prior to 10 September 1944, there are no floor space conditions.

How to proceed

Filing an application

The application is made using the application form for individual housing aid. It must be completed by the applicant and then sent to the Housing Aid Service (Service des aides au logement) together with the required documentation:

• at the latest one year from the date on the notarial deed documenting the purchase of the dwelling; or
  
• in case of a new construction, within one year from the date on which the construction was occupied for the first time.

Each page of the form must be signed separately.

The following must be included with the application:

• for the applicant and any other person living in the dwelling: a copy of the certificate of registration or the permanent residence permit (for nationals of a Member State of the European Union) and/or a copy of the residence permit or permanent residence permit or passport with residence permit (for nationals of a third country);
• a birth certificate (for Luxembourg nationals);
• a copy of the ID card (for applicants of Luxembourg nationality born abroad);
• the salary certificates of the applicant and their spouse for the 3 years preceding the purchase of the dwelling or the start date of the construction works;
• a certificate showing the details of the loan (account number, account holder, amount, term, interest-rate, date of availability, use of the funds);
• a copy of the notarised property deed for the building or the land, dated and signed by the notary;
• a certificate documenting the year of construction of the dwelling;
• a copy of the construction plan dated and signed by the architect or consulting engineer.

Consideration of family status

To determine the amount of the subsidy, the family status on the date of the notarised deed documenting the purchase of the dwelling, or on the start date of the construction works, is considered. If a child is born in the year following that date, the subsidy may be re-examined on the basis of this change in family status. Children who live with the applicant in the subsidised dwelling are also taken into consideration if they are declared as living in the dwelling, and if the applicant receives family allowances for them or they are no older than 27 years of age and are covered by the applicant's health insurance.

The beneficiary of the aid must also immediately inform the administration of any change likely to affect the granting, maintenance, modification, or elimination of the aid, or else risk having to retroactively reimburse the aid.

Consideration of income

The purchase or construction subsidy is calculated based on the applicant's taxable income, which corresponds either to:

• the average income over the 3 tax years preceding the date of the notarised deed documenting the purchase of the dwelling, or the start date of construction work, in the case of uninterrupted professional income during these 3 years, excluding internship periods;
• the income of the tax year preceding that date;
• the income of the year of the purchase or the start of works if:
  • the applicant had no income in the previous year;
  • the applicant's income decreased by more than 10 % compared to the previous year.

The income considered includes the taxable income plus all other income—including the untaxable income of the applicant or of any other person living with the applicant in the dwelling in question, except for descendants and ascendants or family relations up to the 2^nd degree inclusively—exclusive of family allowances, State financial aid for students in higher education, allowances for severely disabled people, orphans' pensions and long-term care insurance benefits.

In the case of joint taxation of 2 spouses or civil partners, the income considered—based on the previous provisions—also includes the net income from remunerated work engaged in by the spouse or civil partner who is enrolled in a personal pension plan, which net income, when compared to the cost of living index number 100, is reduced by EUR 1,250. This reduction is automatically applied to the income of a household exercising an agricultural, commercial, or skilled craft activity, provided that the spouse or civil partner is enrolled in a personal pension plan.

If the 2 spouses or 2 civil partners have been married or officially joined in civil partnership for less than 3 years on the date of the deed of purchase of the dwelling, or on the start date of the construction works, only the income of one of the two spouses or civil partners—whichever is the highest—is taken into account for the calculation of the subsidy.

If the spouses or civil partners are taxed jointly, only the income of one of the two is taken into account, provided the other spouse or civil partner definitively stopped all paid work no later than two years after occupying the residence for which the aid is being sought.

If a portion of the total income includes an amount originating from remunerated work that was not engaged in throughout the entire tax year, such income is extrapolated over the whole year.

The beneficiary of the aid must also immediately inform the administration of any change likely to affect the granting, maintenance, modification, or elimination of the aid, or else risk having to retroactively reimburse the aid.

Refusal of subsidy

The purchase or construction subsidy will be denied if:

• the applicant has donated their wealth to a third-party;
• the financing of the dwelling could be covered entirely by the applicant's own financial means, or by those of their spouse or civil partner;
• the dwelling in question is rented out (even partially) to a third-party, except if it is partially rented to a student enrolled in a post-secondary school in Luxembourg;
• the application for the purchase or construction subsidy has been presented:
  • at the latest one year from the signature date of the notarial deed documenting the purchase of the dwelling; or
    
  • in case of a new construction, more than one year from the date on which the construction was occupied for the first time.

The beneficiary of the aid must also immediately inform the administration of any change likely to affect the granting, maintenance, modification, or elimination of the aid, or else risk having to retroactively reimburse the aid.

Reimbursement of the subsidy  

The dwelling for which the purchase or construction aid is granted must be used as the primary and permanent residence of the beneficiary for at least 10 years after the date of the authentic deed documenting the purchase of the dwelling, or the date of first occupancy, in the case of new construction, failing which the beneficiary may be required to reimburse the aid. If the applicant leaves or sells the dwelling before the end of the 10-year period, the subsidy must be reimbursed.

In addition, by no later than 3 years after the date on which the aid was granted, the beneficiary must be living in the dwelling, or risk having to reimburse the aid.

If one of the beneficiaries of the aid leaves the dwelling before the end of the 10-year period, they must reimburse their share of the aid. If one of the beneficiaries dies before the end of the 10-year period, their share of the aid does not have to be reimbursed.

However, the Minister may partially or totally waive reimbursement of the aid for health, family or financial reasons, or in a case of force majeure.

If the beneficiary of the aid has unduly received the construction or purchase subsidy, it must be reimbursed.

The beneficiary of the aid must also immediately inform the Minister of any change that could affect the granting, maintenance, modification or withdrawal of the aid, failing which they may be required to reimburse the aid retroactively.

Combining the renovation subsidy with other aid

Construction and purchase subsidies cannot be collected concurrently. However, each of these subsidies can be collected concurrently with the savings benefit and with the aid for special home development to cater to the needs of physically disabled persons. Moreover, the construction subsidy can be collected concurrently with the supplementary subsidy for architects' and engineers' fees.

The interest relief as well as the interest subsidy can also be collected concurrently with the construction and purchase subsidy.

The purchase subsidy may be collected concurrently with the improvement subsidy. However, this latter cannot be collected concurrently with the construction subsidy.

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