The government has finally decided on several
measures to support the property market
To tackle the crisis in the property sector, several time-limited measures (for the year 2024) to provide direct support to private individuals have been decided:
Purpose of the tax measures:
- Stimulate the construction industry
- Facilitate access to housing for own use.
- Stimulate investment in rental housing
- Support social rental management
Buyers/tenants for their own use:
- The ceiling for state aid is adapted to the current standard of living. More people (buyers and tenants) will be able to access financial assistance.
- A new “Bëllegen Akt” tax credit: The tax credit will be increased to €40,000 per person. As a result of this measure, buyers will benefit from this credit for purchases up to a maximum of €571,429 per person. The supplement planned for 2024 will still be available to buyers who have already used their tax credit for a subsequent purchase.
- A reduction in capital gains tax on the sale of a property in 2024 to a quarter of the normal rate, provided that the interval between acquisition and sale exceeds two years (so as not to encourage speculation). From January 2025, if the property is held for more than 5 years, capital gains will again be taxed at half the standard rate, in order to discourage property speculation.
- The government plans to double child benefit from €40 to €80 per child. The rent subsidy is €200 for a single person (€3,727) and €280 for a couple (€5,591 ceiling).
- The interest subsidy, currently capped at 2.45%, is due to be increased to 3.5%, as is the income limit. This measure will help new buyers to obtain a mortgage and existing buyers with repayment difficulties.
- The following adaptations have been drawn up for obtaining the State guarantee for access to housing:
- Maximum rate in relation to the cost of the project from 30% to 40%.
- Maximum guaranteed rate from 3% to 6%.
- Revision of applicable income ceilings
- The accelerated depreciation rate for homes built to let in 2024 will rise again to 6% for a period of 6 years, but with an annual ceiling of €250,000. This measure is reserved for new homes.
- New “Bëllegen Akt” tax credit: The tax credit will be increased to €20,000 per person on condition that the purchaser undertakes to let the property for at least two years for residential purposes (a purchase of up to a maximum of €28,5715 per person).
- A reduction in capital gains tax on the sale of a property in 2024 to a quarter of the normal rate, provided that the interval between acquisition and sale exceeds two years. From January 2025, if the property is held for more than 5 years, capital gains will again be taxed at half the standard rate, in order to discourage property speculation.
- Immunisation from capital gains tax for the acquisition of housing used for social rental management or for housing with an A+ energy rating.
Additional measures to support the market in general:
- Continue the acquisition of prefabricated housing projects to rapidly increase the stock of affordable housing in the State:
- Temporary increase in the scales providing the eligibility ceilings for affordable and low-cost housing. This will support sales by public developers.
- Acquisition of 170 housing units for around €110 million.
- Strengthen the programme with an increase in the Special Fund for Affordable Housing.
- A multi-year envelope (2024-2027) of €480 million for the acquisition of 800 additional housing units.
- Guaranteeing a high level of investment in the creation of affordable public housing to expand the State’s rental stock, stimulate and relaunch the activity of construction companies, fill their order books and, above all, promote access to housing.
- Tax immunity for capital gains transferred to housing used for social rental management purposes or belonging to energy performance class A+. This measure is intended to encourage owners to make their properties available for social rental management.
To finance these measures, a budget of more than €900 million has been earmarked via the Special Fund for Affordable Housing for the creation of affordable housing for rent and sale (2024-2026).
Additional open-ended measures:
- Increase in the exemption for rental income from social renting from 75% to 90%.
- Increase in the tax deduction for interest expenses:
- From €3,000 to €4,000 for the year of occupancy and the following 5 years
- After these 5 years, the ceiling will fall from €2,250 to €3,000 for the following 5 years
- From €1,500 to €2,000
- Tax exemption for capital gains from sales under the Housing Fund
- Companies will benefit from a tax exemption for bonuses paid to their employees to support them in renting a home. This measure is capped at €1,000 per month, 25% of which is tax-free.
All these measures are just the start of ongoing discussions in regular dialogue with the public and private players involved.
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