How to Buy Real Estate In Luxembourg as a Foreigner
Who can buy property in Luxembourg?
In Luxembourg, foreigners are permitted to acquire real estate, including land, without any restrictions. This applies equally to citizens of both the European Union and those from non-EU countries, ensuring that property ownership rights are uniform regardless of nationality.
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Investing in Luxembourg real estate presents numerous advantages. As one of the wealthiest countries in the world, Luxembourg boasts a robust economy supported by a strong financial sector and a growing tech industry, which drives demand for both residential and commercial properties. The country’s political stability, high standard of living, and excellent infrastructure make it an attractive destination for expatriates and professionals, contributing to a steady influx of residents and a competitive rental market. Luxembourg's limited land availability ensures that property values remain resilient, with significant potential for long-term appreciation. Additionally, the government offers favorable tax policies for property investors, further enhancing the investment appeal. Overall, Luxembourg's strong economic fundamentals, stability, and quality of life make it a prime location for real estate investment.
In Luxembourg, several locations offer excellent opportunities for real estate investment, catering to a range of lifestyles and investment goals:
- Luxembourg City - As the capital and financial hub of the country, Luxembourg City is the most sought-after destination for residential and commercial real estate. Key areas like Kirchberg, Limpertsberg, and the historic city center are particularly popular due to their proximity to international institutions, luxury amenities, and vibrant business activity. Investors often target high-end apartments and office spaces, making the city a prime location for both residential and commercial properties.
- Clervaux - Located in northern Luxembourg, Clervaux is known for its scenic landscapes and peaceful environment, making it a popular destination for those looking to invest in countryside homes and second properties. The area offers a mix of traditional houses and modern villas, attracting buyers who prefer a tranquil lifestyle while remaining connected to the rest of the country through excellent transportation links.
- Esch-sur-Alzette - As Luxembourg’s second-largest city, Esch-sur-Alzette has emerged as a growing destination for real estate investors. With recent urban development projects, the area has become a hub for young professionals and families. It is known for its vibrant community, modern apartments, and affordable housing options compared to Luxembourg City, making it an attractive choice for both investors and first-time home buyers.
- Differdange - This industrial town, located in the southern part of Luxembourg, has been undergoing significant revitalization. Differdange is now a hotspot for real estate investments, particularly for those interested in affordable residential properties. The town’s ongoing redevelopment projects and modern infrastructure have made it an appealing option for investors seeking long-term growth in property value.
- Mondorf-les-Bains - Mondorf-les-Bains, famous for its thermal spa, is a top choice for those interested in investing in luxury properties or vacation homes. Located near the French border, the town offers a unique combination of wellness tourism and real estate investment potential. The area attracts retirees, second-home buyers, and investors looking for properties with a resort-like feel, surrounded by natural beauty and wellness facilities.
Where to find properties online:
Financing
Foreigners have the opportunity to secure property loans in Luxembourg. The Luxembourgish banking system permits non-residents to apply for these loans, although certain conditions and requirements must be met. Typically, to qualify for a property loan as a foreigner, you will need a valid residence permit, proof of income, or employment, and you must fulfill the specific criteria set by the lending institutions. Additionally, banks may consider your credit history, the property's value, and your overall financial situation when evaluating your application. It's advisable to consult with local mortgage brokers or financial advisors to navigate the process effectively and secure the best financing options available.
Due Diligence and Sales Contract
In a residential real estate transaction in Luxembourg, the due diligence process focuses on evaluating the legal, financial, and physical aspects of the property. This thorough review is essential to confirm that the seller is the rightful owner and that the property is free from any legal complications that might impact your ownership rights or result in unforeseen expenses. Conducting due diligence also involves verifying property boundaries, checking for outstanding debts or liens, and ensuring compliance with local regulations, all of which contribute to a secure and informed investment decision.
In Luxembourg, the property sales contract is referred to as the "compromis de vente." This document outlines the terms and conditions agreed upon by the buyer and the seller. Upon signature by both parties, the agreement becomes legally binding. For both EU and non-EU citizens, the process of purchasing property and the content of the agreement are largely similar to those for local buyers. However, foreign purchasers should be mindful of potential variations in tax obligations and additional administrative procedures that may apply to non-residents, which could influence the overall transaction process.
Property Buying Costs and Taxes in Luxembourg
|
Transaction Costs |
||
| Who Pays? | ||
| Transfer tax | 7.00% - 10.00% | buyer |
| Notary fees | 1.00% - 1.50% | buyer |
| Legal fees | 1.50% | buyer |
| Real Estate Agent's Fee | 3.00% (+ 17% VAT) | seller |
| Costs paid by buyer | 9.50% - 13.00% | |
| Costs paid by seller | 3.00% | |
| ROUNDTRIP TRANSACTION COSTS | 12.50% - 16.00% | |
| Source: Global Property Guide | ||
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.
Transfer tax:
The sale or transfer of immovable property in Luxembourg is subject to a proportional registration duty (inclusive of the transcription tax) of 7%, with an additional city surtax of 3% if the property is located in Luxembourg City.
Notary Fees:
Notary fees are generally from 1% to 1.5% of the property value.
Agent's commission:
Real estate agent's commission is generally fixed at 3% (plus 17% VAT).