On 16 July 2026, the Luxembourg government announced a new housing package designed to support access to home ownership, stimulate residential construction and increase the supply of affordable housing. Two implementing bills of law were submitted to Parliament on 24 July 2026, with further measures expected to follow in separate legislative instruments.
The reform represents the Luxembourg government's latest fiscal and policy response to revitalise the housing market. It combines tax incentives for homebuyers and private investors, a new housing bond designed to channel private savings into affordable housing, enhanced individual housing subsidies and continuation of the State's off-plan (VEFA) housing acquisition programme. At this stage, only two bills of law have been formally submitted, covering the VEFA registration duty exemption and the increase of the Bëllegen Akt tax credit. The remaining measures are expected to require separate legislative instruments.
At a glance
- Permanent increase of the Bëllegen Akt tax credit from EUR 40,000 to EUR 45,000 per person
- Temporary VEFA registration duty exemption on the construction portion of eligible residential acquisitions
- Reduced VAT rate for affordable rental housing
- New accelerated depreciation regime for individual investors
- New Housing Bond expected in 2027
- Additional individual housing subsidies, including enhanced interest subsidies for young first-time buyers
- Additional State support for VEFA projects through a partial-acquisition model
Who is affected? The package is relevant for individuals acquiring a main residence in Luxembourg, purchasers of off-plan residential property, private residential property investors, developers of VEFA projects and stakeholders involved in affordable rental housing.
Key dates: 16 July 2026 is the start date for certain measures, including the increase of the Bëllegen Akt tax credit and the temporary VEFA registration duty exemption. Bills of law 8806 and 8807 implementing these two measures were submitted to Parliament on 24 July 2026. The VEFA measure is expected to apply until 16 July 2029, and the Housing Bond is scheduled to launch in January 2027.
Increased Bëllegen Akt tax credit (bill of law 8806)
To support the recovery of the Luxembourg real estate market and facilitate access to home ownership, particularly for first-time buyers, the government proposes to permanently increase the Bëllegen Akt tax credit for the acquisition of a main residence from EUR 40,000 to EUR 45,000 per person. For a couple purchasing jointly, this effectively raises the combined tax credit to EUR 90,000 and increases the registration duty exemption ceiling to approximately EUR 1.3 million, based on an individual acquisition threshold of approximately EUR 640,000.
The new credit ceiling applies to acquisitions of residential property documented by notarial deed on or after 16 July 2026. Where a buyer has already exhausted the full EUR 40,000 credit (or part of it) in connection with an earlier acquisition, future acquisitions made after the law enters into force will benefit from any remaining balance, increased by the EUR 5,000 uplift provided by this measure.
Exemption from registration duties for VEFA purchases (bill of law 8807)
To stimulate residential construction, registration duties on the construction portion of VEFA acquisitions will be temporarily waived for individuals purchasing property intended for residential use. As a result, duties will be payable solely on the value of the land, reducing upfront acquisition costs for eligible buyers and supporting the financing of new residential developments.
The exemption will apply to VEFA acquisitions documented by notarial deed between 16 July 2026 and 16 July 2029, provided that construction is not more than 80% complete at the time of acquisition. The notary is responsible for verifying, on the basis of the supporting documents produced, that the statutory conditions are satisfied, in particular the degree of completion, and must certify compliance in the deed at their own risk.
For notarial deeds executed between 16 July 2026 and entry into force of the law, registration and transcription duties will be recalculated in favour of eligible buyers if the notary files a request with the Administration de l'enregistrement, des domaines et de la TVA within the applicable two-year time-limit. Beneficiaries will be entitled to a refund of duties already paid and, where applicable, an adjustment of any remaining Bëllegen Akt tax credit.
Other expected measures
Reduced VAT rate for affordable rental housing
According to the government press release, a reduced VAT rate of 8% will be introduced for the construction of affordable rental housing meeting defined criteria relating to surface area (maximum 120 m²), price (at or below the median price per m² published by the Observatoire de l'habitat for the relevant region and dwelling size), rent levels (limited to a rental yield of 4% of net invested capital), a minimum letting period of ten years and certification of the tenant's eligibility by the Ministry of Housing and Land Use Planning. The measure will enter into force upon enactment of the relevant law, without retrospective application.
New accelerated depreciation regime
A new accelerated depreciation mechanism will be introduced for individuals investing in residential property: a 6% rate applied over six years on a construction value base capped at EUR 600,000 per building. Where the cap is exceeded, a standard 2% rate will apply to the full base without time limitation.
Investors who acquire property in 2026 will be able to elect, on an opt-in basis, between the current regime and the new one. From 1 January 2027, the new framework will become the sole applicable regime for new acquisitions, with existing regimes continuing until they expire.
Housing Bond
A new "Housing Bond" is planned for launch in January 2027, with a total envelope of EUR 250 million and a term of three to five years. Interest on the bond will be exempt from the 20% withholding tax. This instrument is designed to mobilise private savings to support the financing of affordable housing.
Expansion of individual housing subsidies
The package includes an enhanced interest subsidy for young first-time buyers: the maximum loan amount taken into account for the subsidy calculation will be increased by EUR 100,000 and thus raised to EUR 300,000 where at least one borrower is aged 35 or under.
The general subsidised loan ceiling will also be raised from EUR 200,000 to EUR 250,000, and the supplement per dependent child will increase from EUR 20,000 to EUR 30,000, for a maximum subsidised loan of EUR 370,000. These enhancements will benefit both new applicants and existing beneficiaries already receiving payments.
In addition, the home ownership premium and the savings premium will be extended to buyers of affordable or low-cost housing where at least one purchaser is aged 35 or under. These subsidies were previously reserved for buyers on the private market.
Continuation of State VEFA acquisition programme
The State will commit an additional EUR 300 million to its off-plan acquisition programme, building on the first programme which secured affordable housing units through an initial envelope of EUR 480 million.
The programme will shift to a partial-acquisition model, under which the State acquires a portion of the units in a given project, acting as an anchor reservation to help developers reach the pre-sale thresholds required by banks and thereby trigger construction financing. Communes will be classified into six categories with regionalised maximum eligible amounts.
Next steps
Bills of law 8806 and 8807 will now follow the normal legislative process and the other measures will require separate legislative instruments. Taxpayers, investors and market participants should monitor the legislative timetable, the final wording of the eligibility conditions and any practical guidance issued by the competent authorities or reflected in notarial practice.
Authors:
- Alain Goebel, Partner at Arendt
- Dr. Philipp Jost, Partner at Arendt
- Thierry Lesage, Co-Chair, Partner at Arendt
- Vincent Mahler, Partner at Arendt
- Stéphanie Maschiella, Partner at Arendt
- Jan Neugebauer, Partner at Arendt
- Yves Philippart de Foy, Partner at Arendt
- Bruno Gasparotto, Principal at Arendt
- Arnaud Huguenel, Associate Partner at Arendt
