Publié le 23 May 2025

Maximizing tax benefits: Essential deductions for Homeowners in Luxembourg

Discover top tax deductions for homeowners in Luxembourg. Learn how to reduce your taxes and optimize your return with taxx.lu!

Owning a home in Luxembourg comes with several financial responsibilities, but it also provides opportunities for tax deductions that can help reduce your taxable income. Understanding which expenses you can deduct will allow you to optimize your tax return and make the most of available benefits. Here’s a breakdown of the key homeowner deductions you should be aware of.

1. Mortgage interest deductions

One of the most significant tax benefits for homeowners is the deduction of mortgage interest. If you have taken out a mortgage to purchase your primary residence, you may be eligible to deduct the interest paid on your loan.

The deductible amount of mortgage interest depends on the property's availability date:
- Availability after 31.12.2022: Full deduction of mortgage interest.
- Availability between 31.12.2018 and 01.01.2023: Deduction capped at €4,000 per person.
- Availability between 31.12.2013 and 01.01.2019: Deduction capped at €3,000 per person.
- Availability before 01.01.2014: Deduction capped at €2,000 per person.

These limits apply per household member, including spouses and children.

2. Mortgage repayment fees

In the year of property acquisition, additional expenses related to loan repayment are deductible, such as:

Notary fees for mortgage registration
Administrative fees for setting up the loan
Bank commission fees
Insurance costs associated with the mortgage

3. Property tax deductions

Homeowners in Luxembourg must pay an annual property tax (impôt foncier). While this tax itself is not deductible for personal residences, certain property-related costs may be deducted if you rent out part of your home.

4. Home insurance premiums

Premiums paid for home insurance that cover civil liability are deductible under "Special Expenses". This deduction helps ensure protection for homeowners while also offering a tax advantage.

5. Landlord-specific deductions

If you rent out your property, additional deductions may apply, including:

Mortgage interest on rental properties
Property maintenance and repair costs
Management fees if you use a rental agency
Depreciation of the rental property

6. Outstanding Balance Insurance (Assurance Solde Restant Dû)

Outstanding balance insurance is often required by lenders to cover the remaining mortgage in case of death. The tax treatment depends on how the premium is paid:

Annual Premiums: Deductible up to €672 per household member per year. This cap includes all eligible insurance premiums and interest on consumer loans.
Single Premium: Offers a significantly higher deduction limit. The base deductible is €6,000 per person, increased by €1,200 per child in the household. Additionally, an 8% increase applies for each year the policyholder is over 30 years old. For example, a 40-year-old with two children could deduct up to €15,120.

Single premium insurance is deductible every 5 years, ideal for covering your home loan over the long term.

7. Solar Panels: What's Deductible
If you install solar panels on your home, here's what you can deduct:

If it's private use only

Loan interest (if financed by a bank loan)
Not deductible: Purchase, installation, maintenance, depreciation

If it's for rental use (tenant benefits from the electricity)

Loan interest
Maintenance and repairs
Depreciation

If it's for Professional or business use (freelance, farm, small business)

All costs (if electricity is used mainly for the business)

⚠️ Selling electricity from small systems (≤30 kWp) is usually tax-exempt, but also not deductible (except loan interest).

8. Home Savings Plan (Épargne-Logement)
Contributions to a home savings plan are deductible up to €672 per household member per year. For individuals aged between 18 and 40, this amount doubles to €1,344. These plans are designed to help taxpayers save for home purchases or renovations.

How to claim Homeowner deductions

To benefit from these deductions, be sure to:

Keep all receipts and invoices related to mortgage interest, renovations, and property expenses.
Check eligibility for government subsidies on home improvements.
Declare deductions in the appropriate tax category when filing your annual tax return.
File with taxx.lu for a simple, stress-free tax return process: no confusing jargon, just smart tax optimization.

Final thoughts

Owning a home in Luxembourg comes with numerous tax advantages, especially when you take full advantage of available deductions. By understanding and claiming these deductions correctly, you can significantly reduce your taxable income and make homeownership more affordable in the long run.

Disclaimer

Tax deductions are subject to approval by the Luxembourg tax authorities and may vary based on individual circumstances.

By making informed financial decisions, homeowners in Luxembourg can maximize their tax savings while securing long-term financial stability.

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