The standard tax rate for the purchase of a real estate property (house, apartment, building land) is 7 %:
- 6 % for registration fees;
- 1 % for transcription fees.
To reduce the incidental expenses associated with the purchase of a dwelling, the Government has introduced a tax allowance—known as a tax credit—on registration and recording fees for anyone wishing to purchase a building (and certain outbuildings and attachments) for use as their personal residence.
This tax credit is limited to EUR 20,000 per property buyer and is subject to conditions of effective and personal occupancy of the property.
In any case, the Registration Duties, Estates and VAT Authority (Administration de l'enregistrement, des domaines et de la TVA - AED) will collect a minimum amount of EUR 100 in registration fees.
Who is concerned
The tax credit can be granted to natural persons who:
- want to acquire a real estate property for personal housing purposes;
- at the time of signing the notarial deed, are:
- either residents in Luxembourg and registered with a commune's population office; or
- not yet residents, but who intend to reside in Luxembourg in the purchased building;
- live in a country of the European Economic Area (EEA). Such persons are treated as residents. They are not required to advance the recording and transcription fees and subsequently request a refund. They automatically benefit from the tax credit, provided they have requested it when signing the notarial deed;
- live in a third country: the tax credit will only be granted when the purchaser can present a certificate of residence in Luxembourg.
No conditions in terms of wealth, value of the building, cadastral income, or purchaser's income are taken into account.
This tax reduction may be granted in the event of the acquisition of a property or fractions of a property by:
- auction sale;
- auction (public sale to end an indivision);
- sharing with returns or capital gains;
- exchange with returns or capital gains;
- constitution or alienation of the long lease right or the building right.
Acquisitions made by means of donations or inheritances are not covered.
The tax credit is granted for:
- building plots located in a residential area and:
- on which a construction can be built immediately under a building regulation;
- intended to serve as the main, personal and effective dwelling of its owner;
- dwellings intended to serve as the principal, personal and effective lodging of its owner and also buildings under construction;
- outbuildings (garages, sheds, barns) or other additions (gardens) which adjoin or are separate from the primary residential building, but located close to it.
Not included are:
- secondary residences;
- weekend homes;
- buildings intended for rental and trade.
How to proceed
Submitting the application
The request to benefit from the tax credit is made by the notary when the notarial deed is signed.
To qualify for the tax credit, the notarial deed must contain:
- the buyer's corresponding request;
- the buyer's commitment:
- to personally inhabit the property within 2 or 4 years from the date of the notarial deed and for an uninterrupted period of at least 2 years;
- not to use it for any other purpose during this period;
- to reimburse the amount of the allowance in the event of non-compliance with the conditions;
- an undertaking on the part of the buyer to declare in writing, to the AED, within 3 months, any transfer or change in the intended use of the building in question.
Amount of the tax credit
The tax credit:
- is limited to EUR 20,000 per buyer;
- can be used at once;
- in the event that the recording and transcription fees due on an acquisition do not reach the total amount of the tax credit, the balance may be used as needed for other acquisitions until it is exhausted.
The buyer undertakes to occupy effectively and personally, as owner, the property acquired:
- within a time limit of:
- 2 years from the date of the notarial deed of acquisition;
- 4 years in the event of the acquisition of a building plot or a building under construction;
- during a period of at least 2 years.
The acquirer may send the director of the AED a written and reasoned request for an extension of the occupancy period.
Reimbursement of the tax credit
The purchaser must repay the allowance granted in full with legal interest from the date of grant if, before the completion of the 2 years of occupation, he:
- rents out the building or just parts of it;
- transfers the building;
- ceases to lodge in the building.
Exemption from the occupancy clause
A request for an exemption from occupation may be addressed to the Director of the AED. The exemption of occupation may be granted:
- in case of force majeure, or;
- due to:
- the purchaser's health condition making it impossible to occupy the building, duly certified by a medical certificate;
- the forced sale of the building;
- expropriation for reasons of public utility;
- the death of the buyer's spouse;
- divorce or dissolution of a legal partnership.
Note that the signing of a preliminary sales agreement results in the immediate transfer of ownership of the building. The 2-year occupancy period is not respected in the event of the signature of a sales agreement before the expiry of this period.
However, it is possible to postpone the time of transfer of ownership of the property to the day the notarial deed is signed. In this case, a special clause is inserted in the sales agreement, such as: "ownership of the building will be transferred on the date on which the authentic instrument is signed".
If there is such a clause, the 2-year period will be considered to have been observed even if the agreement is signed before the term expires, provided that the authenticated instrument is signed after the 2-year term.
After 2 years of occupation, the buyer is free to sell, sell or rent his building.
Exemption from reimbursement
The acquirer may also request a refund waiver when he is under obligation:
- to interrupt the occupation of his building;
- to transfer his place of residence for professional reasons beyond his control.
The request for exemption:
- must be addressed to the director of the AED;
- may be granted on condition that the occupation of the building is resumed:
- upon the buyer's return;
- until the end of the total 2 year occupation period.
Consulting the balance on the remaining tax credit.
The remaining balance of the tax credit for any subsequent notarial instruments may be viewed online via MyGuichet.lu.
Forms / Online services
Tax credit on notarial deeds
Crédit d'impôt sur acte notarié
Steuerkredit auf notarielle Urkunden
Who to contact