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The so-called “Entlaaschtungs Pak” announced by the Finance Ministry in July contains a series of measures aimed at easing the housing crisis, including a tax giveaway for buyers of existing properties.
this Measures announced in July Aims to provide relief to Luxembourg households and businesses in order to boost the economy.
Some of the 16 measures in the tax package, estimated to be worth €535 million, have received widespread publicity since its announcement. Adjusting tax rates to account for indexation is one; tax exemptions for unskilled minimum wage earners are another. Cross-border workers can also receive a tax credit for overtime. However, some measures have received less attention in the Luxembourg media.
One involves mortgage interest charges for buyers who have purchased or plan to purchase an existing property in 2024. These buyers will not only benefit from the newCheap Behavior“And it came from a nice tax giveaway.
In fact, if the Treasury’s roadmap is relied upon, buyers will be able to deduct all interest expenses from their taxable income on the purchase of an existing property. The measure will be valid for 2024 and 2025 and will also apply to bridge loans.
Specifically, if a buyer earns €80,000 per year and pays €15,000 in interest to the bank this year or next, they will be able to deduct the full amount, bringing their taxable income down to €65,000. This will significantly reduce the tax payable in those two years.
But it doesn’t stop there, the Ministry of Finance has set the threshold for deductions at €4,000 for the next four years. According to the ministerial document, the threshold will then be reduced to €3,000 and €2,000.
However, it is worth noting that this measure is part of a bill that has not yet been voted on by the House of Representatives. But the good news is that the bill was approved by a government committee on July 17. The Ministry of Finance expects the bill to come into effect on January 1, 2025.
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