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Loan interest in Luxembourg: how to claim part of it back on your taxes
Home loan or personal loan: part of the interest you pay can lower your Luxembourg tax bill. Limits and conditions, explained simply.
Paying interest on a loan is never anyone's idea of fun.
The good news: part of that interest can find its way back to you, through your Luxembourg tax return.
You just need to know where to declare it, and up to what limit. Here's the whole thing, in plain English.
First: what's "debit interest"?
When you repay a loan, your monthly instalment splits in two:
- the capital: the money you borrowed and are paying back bit by bit;
- the interest: what the bank charges you for lending you that money.
Only the interest (what the taxman calls "debit interest") can be deductible. Paying back the capital never is.
That's the first rule to remember. Everything else follows from it.
Two loans, two ways to deduct
It all depends on what your loan paid for.
- A loan for your main home? The interest goes in the box for deductible debit interest linked to your main home.
- A consumer loan (car, furniture, a holiday…)? The interest is deducted as special expenses.
Two different categories, two different limits. Let's take them one at a time.
1. Home loan: the interest on your main residence
Borrowed to buy or build the house or flat you live in? The interest on that loan can be deducted from your taxable income.
As far as the taxman is concerned, it counts as a cost tied to your property. So it's declared alongside your property income, not under special expenses.
To back it up, you need just one document: the annual statement your bank sends you, showing the interest you paid during the year.
The date that changes everything: the availability date
Since the 2024 tax year, your deduction limit depends on your home's availability date.
In plain terms: the date your home was ready to live in (keys in hand, habitable), even if you only moved in later.
- Off-plan purchase (VEFA): the date the build is finished and the keys are handed over.
- A home that's already habitable: the purchase date.
- A derelict home needing major works: the date it becomes habitable again.
The limit, by availability date
If your home became available after 31/12/2023, your interest is fully deductible, with no cap. That covers most recent purchases.
For older homes, an annual per-person limit applies, and the further back the availability date, the lower it gets. Available between 2020 and 2023, the limit is €4,000 per person. Between 2015 and 2019, it drops to €3,000. And before 2015, to €2,000.
Caution
These cut-off years shift by one each tax year. No need to reach for the calculator: on taxx.lu, the right limit is applied automatically for your situation.
The first year, the loan fees too
The year your home becomes available, you also deduct the costs of setting up your loan: the bank's arrangement fees, the notarial deed opening the loan, and the mortgage registration.
Not to be confused with the notary fees for buying the property itself, which are not deductible.
A limit that multiplies
The limit applies per person in your tax household.
Your tax household is you, plus your spouse or partner taxed with you (what's called "joint taxation"), plus each dependent child.
Note
A family of four (a couple with two children), home available in 2017, limit of €3,000 per person:
€3,000 × 4 = €12,000 maximum deduction per year.
Had the home been available after 31/12/2023, there'd be no cap at all.
2. Personal loan: the interest as "special expenses"
Interest on a consumer loan can lower your taxes too, but in a different category: special expenses.
Special expenses are private costs the law lets you deduct (certain insurance premiums, certain interest, and so on).
Included: consumer loans, for example for a car, furniture or a holiday.
Excluded: loans tied to a property, whether your main home or a let property. Those are declared elsewhere.
The limit: €672 per person, but shared
The limit is €672 per year, per person. It goes up by the same amount for a spouse or partner taxed jointly with you, and for each child who qualifies for a tax allowance (the relief granted for a dependent child).
But mind the trap.
Caution
This €672 limit isn't reserved for loan interest. It's shared with your deductible insurance premiums (third-party liability, accident, and so on).
If your insurance already fills the envelope, there's nothing left for the interest on your consumer loan. And the other way round.
Note
A married couple with two children: total limit of €672 × 4 = €2,688 per year.
That envelope covers the lot: deductible insurance premiums and consumer-loan interest. Not €2,688 for each.
3. Declaring it right, without losing your weekend
Telling a home loan from a personal loan, picking the right category, respecting the limits, attaching the right paperwork… one slip can cost you a deduction, or trigger a request for documents.
Tip
On taxx.lu, you scan your bank statements, and the platform drops them into the right section and applies the limit that fits your situation.
The result: a compliant return, and the biggest deduction you're entitled to, without wading through tax law.
In short
- Only the interest is deductible, never the capital you pay back.
- Home loan (main residence): declared with your property income. Fully deductible if the home became available after 31/12/2023, otherwise a per-person limit based on the availability date.
- Consumer loan: special expenses, limit of €672 per person, shared with your insurance premiums.
- The easiest way to forget nothing and tick the right box: do it with taxx.lu.
