If you take out a home savings policy to finance the construction, purchase or renovation of your home, you may, up to the age of 40, deduct up to 1.344 euros of paid premiums from your taxable income per year. If you have more than 40 years, you can deduct 672 euros.
Interest payments under a real estate loan taken out to build, purchase or renovate a main residence are recognised as expenses that are deductible for the purposes of income tax. Since the tax reform of 2017, you can deduct a maximum of 2.000 euros in respect of the year in which you begin occupying the property and each of the following five years.
In respect of the next five years, this cap falls to 1.500 euros, and from the 11th year onwards, you may deduct 1.000 euros. A Luxembourg resident with at least one dependent child may also, under certain conditions, apply for interest relief, that is granted by the state and reduces the interest rate by 0.50% per dependent child.
In certain circumstances, the Bank may request that the borrower(s) take out outstanding balance insurance (ASRD), which, in the event of their death, will be used to protect the family estate by covering the repayment of the loan.
The one-off ASRD premium is deductible, with the amount varying depending on age.
The tax credit is a reduction in registration and transcription fees for all those who are buying a property as a personal dwelling. This tax credit is limited to EUR 20,000 per buyer!
When you buy to rent, you must declare your rental income. However, you may reduce the amount of your rental income by deducting certain expenses, such as:
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