Luxembourg Cuts Property Registration Fees in Half for 2024-2025: What You Need to Know

Big news for the Luxembourg real estate market! As part of the 2025 state budget announcement, Finance Minister Gilles Roth revealed a temporary reduction in property registration fees. Between October 1, 2024, and June 30, 2025, the fees will be cut in half—from 7% to 3.5%—making it a great time for both homebuyers and investors to enter the market. This measure aims to support the real estate and construction sectors during challenging times, while also providing substantial financial relief to buyers. Here’s a detailed breakdown of how this new rule works and what it means for you.

1. Halving of Property Registration Fees: A Timely Relief

Starting on October 1, 2024, the property registration fees in Luxembourg will be reduced from 7% to 3.5%. This temporary reduction will apply until June 30, 2025, and is a major relief for anyone looking to purchase real estate during this period. The move is designed to stimulate the real estate market, which has faced several challenges in recent years due to high prices, supply chain issues, and rising interest rates.

Who Benefits?

• Homebuyers purchasing an existing home or a property under construction (through VEFA, or sales in future state of completion) for their primary residence will see this reduced fee.
• Investors buying new properties through VEFA will also benefit, but only on the purchase of new properties, not existing homes. In the case of investment properties, only the portion of the property related to land will be subject to the reduced rate.

This reduction in fees is applicable across both types of transactions, though furniture purchases and non-residential property acquisitions remain unaffected.

2. Reduced Fees and the Existing Bëllegen Akt

The new measure also complements the Bëllegen Akt, an existing law that grants a tax credit on registration fees. The Bëllegen Akt remains valid until December 31, 2024, and continues to provide even more savings for buyers. For homebuyers, the tax credit remains at €40,000 per person, or €80,000 per couple, until the end of 2024. Investors, however, benefit from a lower tax credit of €20,000 per person.

How It Works Together:

Here’s where it gets really interesting: If the reduced registration fees of 3.5% don’t exceed your Bëllegen Akt tax credit, you could effectively pay zero registration fees. This is a substantial savings opportunity for those buying during this period.

For example, a couple buying a €1 million home as their primary residence after October 1, 2024, would face €35,000 in registration fees under the new 3.5% rate. However, with the €80,000 tax credit (Bëllegen Akt), they won’t have to pay any registration fees at all, since their tax credit exceeds the calculated fees.

3. Looking at the Numbers: Examples of Real Savings

Let’s break down how the new registration fee reduction can save you big money with two concrete examples:

Example 1: A Couple Buying an Existing Home

A couple is buying a house for €1 million as their primary residence, with the sale completed in October 2024. Under the old system, they would have paid €70,000 in registration fees (7%). But under the new rule, they will only pay €35,000 (3.5%). Thanks to the Bëllegen Akt tax credit of €80,000 for couples, they won’t have to pay any registration fees, as the credit fully covers the €35,000 fee.

Example 2: An Investor Purchasing Property in VEFA

An investor buys an apartment for €700,000 in VEFA (off-plan purchase) on October 9, 2024, with the intention to rent it out once completed. In this case, the investor will only pay registration fees on the value of the land, which is 40% of the total property price, or €280,000. The registration fees on this amount would be €9,800 (3.5%). However, with the investor’s Bëllegen Akt credit of €20,000, they too will not have to pay any registration fees, as the credit covers the fee.

4. Additional Support for the Real Estate Sector

The Luxembourg Chamber of Trades (Chambre des Métiers) has praised this measure, especially considering the competitive pressure within the construction sector. With rising interest rates and increasing costs for materials and labor, the real estate and construction industries have been facing tough conditions. By reducing the costs associated with purchasing a property, the government hopes to stimulate demand and help stabilize the market.

Additionally, this measure is expected to encourage new property development by making it more affordable for both investors and private buyers to purchase properties during the defined period.

5. What’s Next After June 2025?

Once this temporary reduction expires on June 30, 2025, registration fees are expected to return to their original 7%. However, the Bëllegen Akt will also be reduced starting in January 2025—the tax credit for buyers of a primary residence will drop to €30,000 per person, while the investor-specific Bëllegen Akt will be discontinued entirely. This creates a limited-time window for buyers and investors to maximize their savings.

Conclusion: A Win for Buyers and Investors

With Luxembourg’s temporary reduction in property registration fees from 7% to 3.5%, both homebuyers and investors have a unique opportunity to save significant amounts on real estate transactions between October 1, 2024, and June 30, 2025. Combined with the existing Bëllegen Akt tax credit, many buyers may find themselves paying little to no registration fees at all.

Whether you’re looking to buy your primary residence or invest in real estate, these new measures offer substantial incentives to make your move before June 2025. It remains to be seen whether this will spark a surge in transactions, but the savings are undeniably appealing.

If you’re considering buying a property in Luxembourg, now is the time to act and take advantage of these favorable conditions.