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Everything you need to know is included in our Luxembourg Property Pack
Luxembourg is an increasingly popular choice for those looking to invest in real estate abroad. With its picturesque landscapes, diverse culture and friendly locals, it is easy to see why.
However, buying property in a foreign country can be a daunting prospect, with many laws and regulations to consider.
Never fear! This guide is here to make the process of purchasing real estate in Luxembourg as straightforward and simple as possible. We'll cover all the essential information you need to know in a clear and concise way.
Also, for a more in-depth analysis, you can check our property pack for Luxembourg.Can you purchase and own a property in Luxembourg as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Luxembourg for US citizens.
Buying real estate in Luxembourg as a foreigner can be a relatively straightforward process, but there are a few key points to understand.
Firstly, foreigners have the right to purchase real estate in Luxembourg, including land. This right extends to both EU and non-EU citizens. There's no differentiation in property ownership rights based on your nationality, which means that as a foreigner, your rights are essentially the same as those of Luxembourgish citizens. This includes the ability to own property outright, known as "freehold."
You do not need to be a resident of Luxembourg to buy property there. This is quite convenient if you're considering investing in real estate or buying a holiday home. However, if you're planning to live in Luxembourg, different rules might apply, especially if you're from a non-EU country. In that case, you might need a residence permit, but this is separate from the property purchase process.
As for visas and permits specifically for buying property, there's no special visa or permit required just to purchase real estate in Luxembourg.
The process of buying property does not inherently grant you the right to reside in the country. If you plan to stay in Luxembourg, you'd need to follow the standard visa and residency application processes applicable to your situation.
Regarding government authorization, there's no general requirement for foreign buyers to obtain specific authorization from a government institution to purchase property. The process typically involves finding a property, making an offer, and going through a notary to complete the legal formalities, similar to what locals do.
As for minimum investment, Luxembourg does not impose a minimum investment requirement for buying property. However, property prices in Luxembourg can be quite high compared to other countries, so it's important to budget accordingly.
Other important aspects to consider include understanding the tax implications of owning property in Luxembourg, especially if you're not a resident.
Additionally, if you're taking a mortgage, the terms might be different for foreigners, particularly if you don't have an established credit history in Luxembourg.
Can you become a resident in Luxembourg by purchasing and owning a property?
In Luxembourg, there isn't a direct "Golden Visa" program or a specific scheme where purchasing property grants you residency.
Unlike some other countries, Luxembourg does not offer residency solely based on a real estate investment. This means you can't automatically become a resident by just buying and owning property there.
However, this doesn't mean it's impossible for property owners to become residents; it just requires a different approach. If you're interested in residency, you'll need to meet the standard criteria for obtaining residency in Luxembourg, which can vary based on your personal situation, such as employment, family reunification, or study.
For non-EU citizens, common paths to residency typically involve securing a job or establishing a business in Luxembourg.
This would involve obtaining a work or entrepreneur visa. For EU citizens, the process is simpler as they have the right to live and work in Luxembourg under EU freedom of movement rules, but they still need to register their residence if planning to stay longer than three months.
Once you are a resident, the length and type of your residency depend on your specific circumstances.
For example, work permits and residency permits linked to employment are usually tied to the duration of your employment contract. Permanent residency can be applied for after living in Luxembourg for an uninterrupted period, typically five years.
Regarding citizenship, residing in Luxembourg for a certain period can indeed make you eligible to apply for citizenship. This usually requires a continuous period of residence, along with fulfilling other criteria like language proficiency and integration into Luxembourgish society.
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Market metrics
You can find fresh and updated data in our pack of documents related to the real estate market in Luxembourg.
Based on the the the GDP per capita indicator, it is apparent that Luxembourger people have become 1.2% richer throughout the past 5 years.
If the population's wealth grows, it can lead to a heightened demand for real estate, potentially resulting in price increases in the future.
Looking at the data reported by Numbeo, we can see that rental properties in Luxembourg offer gross rental yields between 1.6% and 4.3%.
These yields are typically seen in markets with average demand and rental rates, where the rental income generated from the property covers the expenses associated with owning and maintaining it, while also providing a modest return on investment.
To know more, you can also read our dedicated article: is it a good time to buy a property in Luxembourg?
The life as an expat
Living as an expat in Luxembourg can be an exciting and rewarding experience. The small country offers a unique mix of cultures, languages, and lifestyles. Expats will find a diverse and vibrant atmosphere, with plenty of opportunities for socializing and networking. Luxembourg is a safe and welcoming place to live, with a stable and prosperous economy.
Expats in Luxembourg will find plenty of activities and attractions to explore. The country is known for its picturesque landscapes and historic sites. There are plenty of museums, galleries, and other cultural attractions to visit. Luxembourg also offers a wide range of outdoor activities, such as hiking, biking, and skiing.
Expats in Luxembourg will also have access to excellent healthcare and education. The country has a well-developed public healthcare system, with a range of private health insurance options available. Education is also excellent, with a number of international schools and universities offering courses in English.
Living as an expat in Luxembourg can be a great experience. It is a safe and welcoming place to live, with plenty of activities and attractions to explore. Expats will find a diverse and vibrant atmosphere, with plenty of opportunities for networking and socializing. Luxembourg is a great place to live and work, with a stable and prosperous economy.
What are the best places to buy a property in Luxembourg?
This table summarizes some of the best places to buy a property in Luxembourg.
| City / Region | Population | Average Price per sqm (EUR) | Strengths |
|---|---|---|---|
| Luxembourg City | ≈ 122,000 | 8,000 - 12,000 | Capital city, financial center, UNESCO World Heritage Sites |
| Esch-sur-Alzette | ≈ 36,000 | 6,000 - 9,000 | Second-largest city, cultural events, industrial heritage |
| Differdange | ≈ 26,000 | 5,000 - 8,000 | Steel industry heritage, National Museum of Iron and Steel |
| Belval | N/A | 6,000 - 9,000 | Former industrial site, redevelopment project, University of Luxembourg |
| Echternach | ≈ 5,000 | 4,000 - 7,000 | Oldest city in Luxembourg, picturesque setting, hiking opportunities |
| Diekirch | ≈ 6,000 | 4,000 - 7,000 | Medieval town, National Museum of Military History |
| Remich | ≈ 3,000 | 6,000 - 9,000 | Moselle wine region, scenic Moselle River views, wine festivals |
Want to explore this further?
Do you need a lawyer to buy a property in Luxembourg?
When purchasing a property in Luxembourg, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.
One crucial document they can help you with is the Purchase Agreement (Contrat de Vente), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Luxembourgish lawyer can also assist with conducting a Land Registry Search (Recherche au Registre Foncier) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Luxembourgish laws and regulations.
What are the risks when purchasing a property in Luxembourg?
We've got an article dedicated to the risks associated with purchasing property in Luxembourg.
One of the main risks when buying a property in Luxembourg is the potential for confusion over the legal ownership of the property.
Luxembourg's laws are complex and the regulations governing property ownership can be difficult to navigate. As a result, buyers should ensure they understand the legal title to the property they are purchasing and make sure the seller has the necessary documents to prove their ownership.
Another risk to consider is the potential for hidden costs and fees associated with purchasing a property in Luxembourg.
These fees can include taxes, registration fees, and notary fees, which can add up to a significant sum. You have to be aware of these costs before entering into any agreement.
Finally, buyers should also be aware of the potential for high maintenance costs associated with buying a property in Luxembourg. The cost of repairs and renovations can be expensive, particularly for older properties, and buyers should factor this into their budget before making any purchase.
Everything you need to know is included in our Luxembourg Property Pack
What are the documents needed for a real estate transaction in Luxembourg?
When buying a property in Luxembourg, the list of documents needed include:
1. Identification documents such as a passport or identity card.
2. Proof of income such as salary slips or tax returns.
3. Bank statements for the past three months.
4. A certificate of residence.
5. A proof of payment of the registration fee.
6. A valid contract of sale.
7. A certificate of ownership.
8. A certificate of mortgage.
9. A certificate of compliance with the applicable building regulations.
We review each of these documents and tell you how to use them in our property pack for Luxembourg.
What are the key steps to develop a successful negotiation plan with Luxembourgers?
When negotiating with a local when buying a house in Luxembourg, it is important to remember that Luxembourgers tend to be very polite and diplomatic. It is important to be respectful and not to be too aggressive in negotiations. As Luxembourgers tend to be more formal, it is important to be professional in your communication and to be patient when negotiating. It is also important to be aware of the local customs and laws when negotiating, as these can often affect the outcome of the negotiations. Finally, it is important to remember that Luxembourgers tend to be very loyal to their communities, so building relationships and trust is key to successful negotiations.
Can foreigners obtain a bank loan in Luxembourg?
Yes, foreigners can obtain property loans in Luxembourg. The Luxembourgish banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
To obtain a property loan in Luxembourg as a foreigner, you'll usually need a valid residence permit, proof of income or employment, and meet the specific criteria established by the lending institutions.
In Luxembourg, foreigners may explore mortgage options with banks such as BGL BNP Paribas, Banque de Luxembourg, and ING Luxembourg.
Additionally, in Luxembourg, mortgage rates for a 20-year term range between 0% and 4%, offering borrowers attractive financing options.
What are the taxes related to a property transaction in Luxembourg?
Here is a breakdown of taxes related to a property transaction in Luxembourg.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Rental Income Tax | Tax on rental income generated from the property | Between 0% and 42% of rental income, depending on the taxpayer's overall level of income | Owner |
| Registration Tax | Tax on the transfer of property ownership | 6% of the property value, with an additional 1% transcript tax | Buyer |
| Capital Gains Tax | Tax on the capital gain from the sale of a property | Varies from 21% to 41% on the capital gain, depending on the holding period | Seller |
| Property Tax | Annual tax on real estate property | Varies from 0.7% to 1% of the cadastral value of the property, depending on its type and location | Owner |
What fees are involved in a property transaction in Luxembourg?
Below is a simple breakdown of fees for a property transaction in Luxembourg.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Notary Fee | Fee for notarizing the property transfer documents | Generally around 1.5% of the property value | Buyer |
| Real Estate Agent Fee | Fee charged by real estate agents for their services | From 3% to 5% of the property purchase price | Seller |
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