Posted on 14 February 2025
2025 taxes: Interest deduction limits and rules for primary residences
2025 tax update: New mortgage interest deduction limits for primary residences in Luxembourg. Learn how to maximize your tax savings with taxx.lu!
Starting from the 2024 tax year, new rules apply to the deduction of mortgage interest for primary residences in Luxembourg. These changes bring important adjustments to tax declarations, particularly concerning the availability date of the property and the deduction limits.
1. Key change: The availability date
The availability date of a primary residence is now the determining factor for setting the deductible mortgage interest limit, replacing the previous criterion of the move-in date. The availability date is defined as the moment when the property is ready to be occupied, even if the actual move-in happens later.
How to determine the availability date?
The availability date varies depending on the type of property purchase and its condition:
Buying a property under construction (VEFA)
Buying a property under construction (VEFA)
The availability date is the completion of construction and the handover of keys.
Buying an existing property
Buying an existing property
The availability date depends on the condition of the property and any necessary renovations:
- If the home is immediately habitable (only minor work like painting or flooring is needed), the availability date is the purchase date.
- If the home is dilapidated or in ruins and requires major renovations, the availability date is the date when the property becomes habitable.
💡 Good to know: A home is considered uninhabitable if it lacks essential features such as heating (central or auxiliary), basic sanitary facilities, a kitchen area, and a sheltered living/sleeping space. In this case, the availability date will be when these elements are in place, allowing for normal occupancy.
2. New deduction limits based on availability date
The deductible mortgage interest limits have been adjusted based on the property's availability date:
- Availability after 31/12/2022: Full deduction
- Availability between 31/12/2018 and 01/01/2023: €4,000
- Availability between 31/12/2013 and 01/01/2019: €3,000
- Availability before 01/01/2014: €2,000
These limits apply per household member, including spouses and children.
💡 Note: For the year of purchase (2024), in addition to mortgage interest, notary fees for loan agreements and bank commission fees are also deductible. This helps reduce the tax burden in the first year of homeownership.
3. Practical examples of the new rules
Example 1 – A couple with one child purchasing a property in 2024
- Purchase date: 15/03/2024
- Availability date: 15/03/2024 (immediately habitable)
- Mortgage interest in 2024: €12,000
- Notary fees for loan agreement: €2,500
- Bank commission: €1,500
Tax deduction calculation:
- Applicable limit: Full deduction (availability after 31/12/2022)
-
Total deductible expenses:
- Mortgage interest: €12,000
- Notary fees: €2,500
- Bank commission: €1,500
- Total deduction for 2024: €16,000
The couple can fully deduct €16,000 from their taxable income, optimizing their tax benefits.
Example 2 – A couple with one child who purchased a property in 2020
- Purchase date: 01/06/2020
- Availability date: 01/06/2020 (immediately habitable)
- Mortgage interest in 2024: €10,000
Tax deduction calculation:
- Applicable limit: €4,000 per person (availability between 31/12/2018 and 01/01/2023)
-
Total deductible amount:
- €4,000 per person
- Household of 3 (couple + 1 child) → €4,000 × 3 = €12,000
- Mortgage interest in 2024: €10,000
Since the total mortgage interest (€10,000) is below the household limit (€12,000), the couple can deduct the full €10,000 from their taxable income.
4. Key takeaways
✔ The availability date replaces the move-in date as the key tax criterion.
✔ Deduction limits are adjusted based on the home’s availability year.
✔ Full deduction applies to recent purchases (after 2022).
✔ For older properties, a per-person deduction limit applies.
✔ Deduction limits are adjusted based on the home’s availability year.
✔ Full deduction applies to recent purchases (after 2022).
✔ For older properties, a per-person deduction limit applies.
The 2024 tax return is now available on taxx.lu! Our platform is fully updated with these new rules to simplify your tax filing. Log in now and take advantage of 100% online tax support to maximize your deductions.
