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What is a deductible home savings plan
According to our last poll, 44% of respondents save to acquire a house or an apartment. To help you, we wanted to put in perspective the tax deductible home savings plans (Bausparvertag).
In order to encourage saving, Luxembourg law foresees tax relief on some specific savings plans. The tax deductible home savings plans (Bausparvertrag) are generally used to accumulate funds to invest into the purchase or the renovation of a house or an apartment.
Age of tax payer |
Single |
Married |
Per child |
From 18 to 40 inclusive |
€ 1 344 |
€ 2 688 |
€ 1 344 |
41 and over |
€ 672 |
€1 344 |
€ 672 |
During the first 10 years of the contract, if you want to invest into a new home or renovate your current home you can get the saved money paid out as long as you can prove to the tax authority a home related usage of the funds.
If you already own a property you could also call the home savings plan a “health insurance” for your property as it helps you to put money aside in case some unexpected costs related to the property pop up.
After 10 years, however, your are free to use the saved money as you wish. In this case, as you have fulfilled your 10 year savings objective, the savings institute of the contract (Bausparkasse) will offer you a loan at an attractive fixed interest rate for at least the same amount saved beforehand. Combinations of traditional mortgage loans with a home savings plan and its related fix rate loan are possible and can be an interesting option for home financing.
Up to the yearly sum of €672 or € 1 344 (per taxable person), you will get your taxes refunded for that same amount via your tax declaration. The home savings plan thus brings in more advantages than just a simple interest rate and a favourable loan.
12/21
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