To facilitate your access to a property, to save, or to pay less tax, home savings plans exist since several decades. Is it still necessary to subscribe to a home savings plan? Are they all the same? Why is this savings product so successful in Luxembourg?
The home savings plan is a popular product which is interesting even for those who do not have a property project.
To find out the reasons for this success we asked the opinion of a specialist in the sector, Mr. Georges Spanier, CEO&FOUNDER of CREDITSIMMO.LU. You will find a summary of this interview below.
The building savings contract is a savings method that will help you financing your real estate. It will provide you with the necessary equity for a property purchase.
Because of its fixed interest rate, which is known from the very first day, the building savings contract is also an "insurance" against rising interest rates.
It is not totally essential to be eligible for a loan, but in addition to the equity you have built up, it allows the borrower to prove to the bank your ability to save and therefore your ability to repay your future loan. These elements are a definite advantage when you request a loan to finance your property purchase.
On the other hand, it becomes essential if you wish to establish a right to state aid such as the state guarantee for your future purchase.
56 euros per month is the minimum savings effort you will have to make, but it will provide you with much more...
The contract must have been concluded for the purpose of financing the construction, acquisition or conversion of a flat or house for personal use, including the price of the building land.
In general, all taxpayers, whether resident or non-resident, may have an interest in subscribing to a home savings plan, as the contributions paid into home savings contracts can be tax deducted. In addition to the return, the tax savings are an enormous advantage.
However, there are conditions to be met both in terms of the amounts that can be deducted, which depend on your tax household, and in terms of the contracts that are actually eligible (which must be offered by a company authorised in Luxembourg or in another EU Member State (banks, credit institutions and other financial organisations are excluded).
If we only consider this tax aspect, the interest of the operation depends on a certain number of parameters.
The funds remain available if they are used for primary housing measures as provided for in the tax law. There are advantages but also some constraints.
All the more reason to talk to our experts who will advise you according to your situation and objectives.
NB: If you wish to take advantage of tax reductions for the entire tax year 2021, your plan must be subscribed to before 17 December 2021 for your file to be properly managed.