The 2024 housing package: key measures made permanent

Luxembourg’s latest housing initiatives aim to support home ownership, stimulate construction and expand affordable rental housing. We review the key tax measures and proposals, their eligibility conditions and implementation timelines.

Since May 2024, Luxembourg has relied on a temporary "housing package" to revive the real estate market. Among other measures, it temporarily raised the "Bëllegen Akt" tax credit (a credit that reduces the registration and transcription duties payable on the purchase of a main residence) from EUR 30,000 to EUR 40,000 per person. These temporary measures were subsequently extended until 30 June 2025.

The law of 3 July 2025 then made the EUR 40,000 Bëllegen Akt permanent for notarial deeds executed from 1 July 2025, so home buyers no longer depend on successive extensions. This permanent EUR 40,000 amount is the starting point for the further increase announced in July 2026.

The “Booster fir de Wunnengsbau”: a new housing package

On 16 July 2026, the Minister of Finance and the Minister of Housing presented a new package of housing measures, the "Booster fir de Wunnengsbau", to further stimulate housing construction, support home ownership and increase the supply of affordable housing. For the first time, some housing tax benefits are linked to social criteria.

First, the Bëllegen Akt tax credit is raised to EUR 45,000 per person for the purchase of a main residence, with no time limit. A property worth about EUR 640,000 could thus be bought without registration duties (about EUR 1.3 million for a couple).

VEFA: registration duties limited to land value

Second, individuals buying an off-plan home (VEFA) as their main residence will pay registration duties only on the value of the land, provided construction is less than 80% complete at signing. This applies for three years to deeds signed from 16 July 2026.

For both measures, buyers who sign before the law enters into force can still benefit by filing a request with the Registration, Estates and VAT Administration (AED).

Third, a reduced VAT rate of 8% will apply to the construction of affordable rental housing meeting several criteria. The conditions include a maximum floor area of 120 m², a price per m² not exceeding the regional median published by the Observatoire de l’habitat, a rental yield capped at 4% of the net capital invested, rental for at least ten years, and a tenant certified as eligible by the Ministry of Housing. This measure will not apply retroactively.

A new accelerated depreciation regime for rental housing

Fourth, a new accelerated depreciation regime for rental housing, aimed at individual investors, will allow a deduction of 6% per year for six years on a construction value of up to EUR 600,000. According to the Government, 2% applies above that threshold, with no time limit. Renovations costing more than 20% of the building’s value are also covered. For 2026 acquisitions, investors may choose between the current 4% regime and the new one; from 1 January 2027, only the new regime would apply to new acquisitions. The regime is introduced for an indefinite period but will be evaluated after three years.

Housing Bond: exemption from withholding tax

Fifth, a EUR 250 million "Housing Bond" open to the public, with a term of three to five years, is planned for January 2027 to finance affordable housing. Interest will be exempt from the 20% final withholding tax.

Increased housing aids

Sixth, individual housing aids are to be increased. The loan amount considered for the interest subsidy would rise from EUR 200,000 to EUR 250,000 (plus EUR 30,000 per dependent child instead of EUR 20,000), and by a further EUR 100,000 where a borrower is aged 35 or under. Young buyers of affordable housing would also gain access to the home ownership and savings premiums.

Seventh, the State is to add EUR 300 million to its programme for purchasing affordable off-plan homes. It would also be able to buy only some of the units in a project, which helps developers reach the level of pre-sales that banks require before financing construction.

Practical implications and outlook

The registration duty measures are still under review by Parliament and may be amended before adoption. The VEFA exemption requires construction to be no more than 80% complete at signing, and deeds signed before the law enters into force will require a request to the AED. The depreciation option is intended to apply to rental properties acquired in 2026.

The 2027 Budget Bill, presented on 7 October 2026, also includes measures relevant to the sector such as a one-point cut in corporate income tax rates from 2027 (from 16% to 15% for large companies, and 14% to 13% for SMEs), and the removal of the time limit on carrying forward tax losses. The Budget Bill’s commentary indicate that a withholding tax on real estate capital gains is contemplated for 2028. The Budget Bill further allocates EUR 581.5 million to affordable housing. The 2027 Budget Bill may still be amended.