Homeowners - give your property a new lease of life!

Are you familiar with the principle of social rent management ("Gestion Locative Sociale" - GLS)? Any foundation, non-profit association or company with a social impact whose corporate purpose is to promote housing, or any local authority or association of local authorities, as well as public developers, can sign a cooperation agreement with the Ministry of Housing and Spatial Planning. They then rent out homes belonging to private owners to people experiencing housing difficulties (often low-income households).

From the owner, via the approved body, to the occupant, social rent management is based on simple and effective procedures:

• Owners wishing to rent out their property contact the approved organisation of their choice. The body offers to rent the property below market rates, while offering a range of attractive benefits in return.
• The owner and the subsidised organisation sign the lease contract. Next, the tenant's task is to select an occupant according to various criteria.
• The partner fulfils its obligations as a tenant and looks after the occupant, as well as carrying out minor maintenance work on the property.

What are the advantages for me as an owner? 

• I have a guaranteed rent: by signing a lease with a partner under agreement, the rent is guaranteed to be paid every month without fail, even if the property is not occupied
• I benefit from tax exemption: currently, as an owner, I receive tax exemption of 75% on net rental income (réforme fiscale 2017 - Art. 115/22a L.I.R.); even better, in the medium term, the 75% rate will be raised to 90%. So 90% of the rent will be tax-free! 
• the occupier of my property is well looked after: the occupier of the property is looked after by a team of professionals in the social field, who support him throughout the term of the contract and intervene if necessary
• my property remains available to me and my family: if I have a personal need, I can get my property back quickly. The occupants of your property will be rehoused by the partner
• the maintenance of my property is guaranteed: the contracted partners have technical teams who monitor and maintain my property

Get in touch with an approved partner now! Find the full list on: www.logement.lu/gls

Since 2011, any single-family home can be fitted with an integrated unit, either as part of the initial planning of the house or as an afterthought.

This means that a single-family home can easily be converted into a two-family home. The integrated unit requires planning permission and cannot be sold separately.

The integrated unit must also be subordinate in terms of floor area to the main unit and must have its own entrance door, either from the outside or from a communal circulation area.

Integrated housing gives the owner a single-family home that can be adapted to suit the composition of the household or the lifestyle chosen. Integrated housing is an investment property that can provide security in the event of a change in lifestyle. The support of parents or grandparents for childcare or the provision of a home for teenage children can be a major asset. Integrated housing can also be considered as an investment property that can be used as rental accommodation to generate additional income.

The single-family home can therefore easily be transformed into a two-family home. The only constraint is that the integrated unit cannot be sold separately.

A grant of €10,000 for the creation of an integrated unit has been introduced, with no income requirements. The homeowner who applies must live in one of the two units after the work has been completed. This subsidy is increased to €20,000 for all integrated housing completed before the end of 2026 (article 31 de la loi modifiée du 7 août 2023 relative aux aides au logement).

The website luxembourg.public.lu contains a list of all housing grants.

Exemption from capital gains tax and income tax on the sale of real estate assets

Speculation profits and capital gains are exempt from income tax if they are realised by individuals on real estate sold to the State, communes and associations of communes, with the exception of land subject to the right of pre-emption (article 29 de la loi du 22 octobre 2008 portant modification de la loi modifiée du 30 juillet 2002 déterminant différentes mesures fiscales destinées à encourager la mise sur le marché et l’acquisition de terrains à bâtir et immeubles d’habitation).

Any owner of land or a residential house wishing to sell their property to the State or a commune is exempt from capital gains tax.

Right of pre-emption

The law of 22 October 2008 known as the "Pacte Logement", as amended by the law of 3 March 2017 (known as the "Loi Omnibus"), opens up, under certain conditions, pre-emption rights for the benefit of communes and/or the State (public developers) on the sale of any unbuilt plot of land located in urbanised areas or areas destined to be urbanised as indicated in the commune's general development plan (PAG), located wholly or partially within a one hundred metre strip along the boundary of the urbanised area or area destined for urbanisation and located outside these areas.

Therefore, before a deed of sale can be signed, the notary must check whether such a right of pre-emption exists.

The right of pre-emption may only be exercised with a view to the construction of housing covered by the provisions of the law of 7 August 2023 on affordable housing or with a view to carrying out infrastructure works or public facilities.

Property and speculation tax

Luxembourg's current property tax system, which dates back to the 1930s, no longer meets today's requirements as it no longer takes into account the real value of the property concerned. The 2023 coalition agreement provides for a reform of property tax, the introduction of a national tax on unoccupied housing and the mobilisation of land as soon as possible.

It involves:

• eliminate the inequalities created by the current property tax system;
• create a new model for valuing land, so that its value can be set objectively, transparently and fairly;
• combat the housing shortage by encouraging owners to use their land and make their existing homes available on the rental market.

The amount of property tax is based on the inherent value of the land, which is largely determined by the building potential based on the classification in the general development plans (PAG). The government has set up the IFON-Similateur, a simulator that can be used to calculate the revalued property tax.

The purpose of the land mobilisation tax is to encourage the construction of buildings on plots of land earmarked for development. If this does not happen, the mobilisation tax becomes payable.

Finally, the tax on the non-occupancy of housing is designed to tax buildings built for housing purposes that remain unoccupied.