Luxembourg MPs extend the living aids until June 2025.
The extraordinary tax package, which was introduced in spring 2024 to get the housing market going, will be extended by six months until the end of June 2025. The MPs passed a corresponding law on Wednesday afternoon.
How the government wants to miss a booster
Specifically, the increased tax credit « Bëllegen Akt » will be extended to 40,000 euros for the acquisition of a main residence and the tax credit of 20,000 euros for investments in rental apartments.
In addition, the sentence (6 percent) and the duration (6 years) of the accelerated depreciation for apartments that have been built (VEFA) are increased. The non -taxation of real estate gains that are invested in social rental or energy efficiency is retained.
Finally, the reduction of the tax rate for capital gains is maintained to a quarter of the total tax rate; And to maximize the incentive effect of this measure, the speculation period is extended to two years (by June 30, 2025).
Extension so as not to slow down the current upswing
The decision to extend state aid was made « so as not to slow down the current upswing in real estate transactions, » said the Ministry of Finance.
The upswing was there, in particular the activity in the markets for residential properties and land, was taken on speed due to the « combined decline in real estate prices, interest rates and taxes, » said the ministry.
VEFA segment is booming: sales almost quadrupled
The observed recovery of the number of transactions « continues in the fourth quarter of 2024 », says the observatory for housing in its publication « Le Logement en Chiffres » (housing system in numbers) published in March), a recovery after a very difficult year 2023.
Number of transactions reaches pre -crisis standard
« In the market for existing apartments, the number of transactions even returns to a level that lies over (for existing apartments) or near (for existing houses) that of the previous crises (2017-2021), » continued the observation center.
The increase in activity is even stronger on the market for apartments under construction, although this was boosted by the public sector by the public sector or the city of Luxembourg in recent months. Nevertheless, the total number of transactions is just under half of the average pre -crisis level in this sector.
Renovation instead of demolition and new building
At the initiative of Paulette Lenert (LSAP), measures could be taken by the summer to better protect and calm potential buyers of planned or built apartments.
Increase in housing prices through the aid should be avoided
These aid should support the recovery of the real estate market, but should not be extended after the deadline at the end of June. When advising the text in the responsible committee, Finance Minister Gilles Roth (CSV) made it clear that he assumes that these measures will not be extended and that the government will concentrate on the offer page.
The measures could have a negative effect because they could contribute to an increase in property prices.
« The measures could have a negative effect because they could contribute to an increase in real estate prices, » Roth said.
The concern is justified. This price increase was already felt in the fourth quarter of 2024: Real estate prices (apartments and houses together) rose by 1.4 percent compared to the fourth quarter of 2023, as can be seen from the latest figures in the observation center for the housing system. This is the first annual increase since the end of 2022.
This increase in the existing apartments, which increased by 2.4 percent in the same period (+3 percent in houses and +1.8 percent in the apartments). The total average of the prices is pulled down by the prices for apartments under construction, which have dropped by 2.4 percent compared to the previous quarter.
Real estate crisis: Why counter measures so far hardly press the prices
In addition to the real estate prices, of course, the not negligible question remains about the costs of state funding. According to the Ministry of Finance, the “tax loss” by the measures for 2024 amounts to 133.5 million euros. The budgetary effects of the extension of the package of measures for the first six months of 2025 are estimated at 27 million euros for the « Bëllegen Akt » and four million euros for the accelerated depreciation of six percent.
This article first appeared on www.virgule.lu / Translation and processing: Liz Mikos
