What financial assistance is available for renovating your home?

There are three main types of renovations assistance: direct capital assistance, subsidies for improving energy performance and indirect assistance in the form of tax benefits.

First of all, there is the bonus for improving old housing. It is granted for certain work conducted to improve the liveability, safety and security of old housing. The improvement bonus corresponds to a maximum of 30% of the sum of invoices related to the improvement work. It cannot exceed a total sum of 10,000 euros per beneficiary. Its amount is determined according to income and family situation.

Two main conditions are required to qualify for this bonus. The first is that you must live in the housing as a permanent residence and not be the owner or beneficial owner of another dwelling, whether in Luxembourg or abroad. The second concerns the actual work. These must be done in a building that was first occupied, by you or the previous owner, more than 15 years ago. If you intend to extend the space of the building or create new rooms, only the criterion of habitable area will be taken into account: between 65 and 140 m²  for a single-family dwelling and between 45 and 120 m²  for an apartment. This calculation does not include the cellar, attic and garage as well as common areas in joint ownership. No space condition is to be met for buildings constructed before 10 September 1944.

This assistance may be combined with the additional bonus for architects’ or consulting engineers' fees  up to a maximum of 1,250 euros.

You can also benefit from assistance for special accommodation expenses for people with physical disabilities: 60% of the cost of the works without exceeding 15,000 euros. If the housing was built after 10 September 1944, it must meet the same habitable area criteria as for the improvement bonus: between 65 and 140 m² for a single-family dwelling and between 45 and 120 m² for an apartment.

Subsidies from the Environment Office are provided if you intend to improve the sustainable energy performance of your home (PRIMe House 2017). They concern, on the one hand, the sustainable energy improvement of a dwelling dating back more than 10 years (various insulation works, replacement of windows, controlled ventilation) and, on the other hand, the establishment of technical installations promoting renewable energy sources (solar thermal or photovoltaic installation, heat pump, wood-burning furnace, district heating and/or connection to a heating network).

There are two types of indirect assistance. The first concerns the super-reduced VAT rate. Luxembourg State submits the renovation of housing intended for primary housing purposes at a reduced rate of 3%. This tax allowance cannot exceed 50,000 euros per home. In addition, not all works benefit from the reduced rate. This is particularly the case for equipped kitchens and special technical equipment, such as the installation of alarms, interior blinds and curtains or landscaping surroundings.

You can also deduct the interest charges and other costs related to the renovation of your home from your taxes provided that you do not occupy it for the duration of the work. Be careful, this deduction is not as easy to obtain as that. In the case of direct taxes, a dwelling that is continually available to a taxpayer is considered to be a dwelling occupied as a principal or secondary residence. In addition, the Direct Tax Department does not consider the expenses which aim to change the nature of a building as renovation expenses (e.g. to subdivide the house into smaller dwellings), to improve it (e.g. install central heating or a lift) or extend it (e.g. develop an attic floor).

Tip: find out about state assistance before you start, especially if you plan to incorporate the amount of assistance in your renovation budget.  Please read all the information contained in the Citizen Portal of the site guichet.public.lu carefully.

Find new tips from ING experts every Tuesday.

Key words: tax administration, financial assistance, architect, renewable energy, taxes, consulting engineer, ING, interest, housing, energy performance, bonus, renovation, subsidy, super-reduced rate, conversion, works, VAT

12/2021