Firstly, there is the financial aid for the renovation of old housing. This funding from the State may be obtained for certain works to improve the habitability, hygiene and safety of old housing. The following conditions are required for the grant of the subsidy.

You must live in the housing as your principal and permanent residence and not be the owner or usufructuary of another residence, whether in Luxembourg or abroad. The works must be performed in buildings that were first occupied more than 15 years ago or, in the event of increasing the building’s surface area, not exceed 140 m² of useful residential surface for a single-family residence (120 m² for an apartment). The surface area measurements do not include cellars, attics, garages or common areas in co-owned buildings. For buildings constructed prior to 10 September 1944, there is no surface area condition. Routine maintenance and embellishments do not qualify for the subsidy.

The subsidy will correspond to no more than 30% of the total amount paid for the renovation works and may not be greater than EUR 10,000 per beneficiary. In addition, the amount of the renovation subsidy is determined according to the income and family status. If, for example, your household is childless and your monthly accumulated income exceeds EUR 6,250, you are not entitled to the subsidy.

Financial aid from the State for the renovation of old housing may be combined with the additional grant for architect or consultant engineer fees capped at 1,250 EUR. You may also benefit from other aids, such as the financial aid for special home adaptations for persons with physical disabilities – 60% of the cost of works without exceeding EUR 15,000 – and financial aids for the promotion and rational use of energy and the development of renewable energy sources. The Ministry of Environment (Ministère de l’Environnement) grants subsidies called “PRIMe HOUSE” for energy efficiency enhancements in existing residential buildings and to cover the investment and installation costs of solar thermal or photovoltaic systems, heat pumps, wood-fuelled boilers and heating networks and connections.  

There are two types of indirect financial aids. The first concerns the VAT rate. The Luxembourgish State offers a super-reduced VAT rate of 3% on the construction and renovation of housing, provided you use and own the property as your principal residence. The reduced rate is directly applied in the invoices or the difference between the normal VAT and the reduced rate is reimbursed. The total amount of the tax benefit resulting from the application of the super-reduced rate of 3% must be no more than EUR 50,000 per newly built and/or renovated home. In addition, some works such as equipped kitchen, special technical equipment (installation of an alarm system, etc.), internal blinds and curtains and furnishing of surrounding areas are excluded from reduced-rate VAT.

You can also deduct from your taxes interest payments and other renovation work expenses if the building is unoccupied during the work. Be careful, if the tax administration accepts without difficulty the deductibility of home renovation loan interests, that is not the case for renovation work expenses. If you want to change the nature of your housing (by subdividing your dwelling into flats or transforming it into a commercial space), improve it (by installing, for example, a central heating system or a lift) or enlarge it (by adding a room or converting the attic into living space), your renovation work expenses will be considered as investment expenses and, as such, not deductible. By way of simplification, the Luxembourg Inland Revenue considers that renovation works not exceeding 20% of the purchase price (excluding land) do not improve the building and may be deductible as maintenance and repair costs. If you intend to make a massive home renovation, there are few chances that your expenses will be considered as deductible by the tax administration.

One piece of advice: find out about the grants from the State before starting your renovation works, especially if you intend to include the amount of these financial aids in your renovation budget. Don’t hesitate to read carefully all the information in the Citizen’s Portal on the site www.guichet.lu. The information is mostly available in French or German but is worth reading because it can allow you to increase or decrease the maximum amount of your renovation works.

12/2021