With almost 12,000 new residents every year, the real estate market in Luxembourg is booming. With tax incentives on the increase, home ownership in Luxembourg is a profitable investment. Eric Thill of AXA’s Hobscheid branch takes stock to guide you in your property purchase.

A constantly growing real estate market

Real estate growth in Luxembourg has been steadily increasing in recent years. Apartment and house prices continue to rise, despite an adjustment in recent months. On the other hand, expected rents increase even more, and rental investment is clearly attractive.

This inflation of the square meter is favorable to buyers. They see real estate in Luxembourg as a very profitable investment. Even if today it appears more and more difficult to obtain loans and despite the increase in interest rates, the purchase of real estate for rental investment remains an interesting investment.

Why invest? A tempting tax system

Growth is driven by tax incentives from the Luxembourg government. Firstly, purchasers can benefit from a tax allowance on the purchase of their home, as well as a tax credit on notarial deeds – see Bellegen Akt. Transaction costs are limited, property taxes are low, and the interest on the loan is deductible on your tax return.

Concerning the insurance of the real estate credit (insurance remaining due), the purchaser of a real estate also benefits from a tax credit. Mandatory to take out a bank loan, this insurance protects you and your family in the event of a hard blow.

Your AXA agency can assist you in setting up your mortgage insurance.

Prices vary by location

There is a strong disparity in the price per square meter between Luxembourg City and the rest of the country, especially the north. When looking to buy in the capital, the square meter for an existing apartment is over 10,000 euros. If you move away from the capital, towards Hobscheid in the west, towards the north in Wiltz or towards the east in Echternach for example, the square meter goes down to 6.000 € on average.

There is also a variation, depending on whether you buy new or old, even if this variation tends to diminish. For a new apartment in the capital, the square meter goes up to 15.000€. The best way to follow the evolution of the market is to consult the Observatoire de l’Habitat website.

How to buy in Luxembourg

In order to become a homeowner, a buyer must be able to prove that he or she has made a personal contribution of 20 to 30% of the purchase price.

Next, you will need to take out an insurance policy on your home loan. This measure, systematically imposed by the banks, will protect your family in case of a life accident. Do not neglect to study the guarantees offered by this contract.

Once you have found your apartment or house and signed the preliminary sales agreement, the deed of sale must be drawn up by a designated notary. For more information on this subject, we recommend the website of the notary’s office in Luxembourg.

Do you want to take the plunge and become a homeowner in the Grand Duchy? Let us help you with all your insurance needs the AXA Eric Thill agency in Hobscheid26d, Grand-Rue L – 8372 Hobscheid, tel : 27 39 27 1, eric.thill.agent@axa.lu

Learn more about housing in Luxembourg.

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