Construction grant

A capital grant can be obtained from the State for the construction of a dwelling (single family house or flat) or for first occupancy of a dwelling. The grant can range from 250€ to 9,700€. The sum granted depends on your income and the composition of your household.

Conditions

1. to qualify you need to have taken out a mortgage from a financial institution for the purpose of building a home in the Grand Duchy of Luxembourg, which will effectively constitute your household's principal and permanent residence for a minimum period of 10 years

2. you must be neither owner nor usufructuary of another dwelling either in the Grand Duchy or abroad

3. you must respect the criteria for useful living space as specified below :

• single family house : between 65m2 and 140m2
• flat : between 52m2 and 120m2

These dimensions can be increased :

• by 16m2 per child starting with the third dependent child
• by 20m2 for each ascendant who is a member of the household, provided :
  • the household includes over 4 members
  • the ascendant is not himself or herself owner or usufructuary of a dwelling
  • the ascendant has a disability that precludes his or her living independently

The basements, garages, attics, workrooms, or other professional outbuildings are excluded.

Household composition

The grant is assessed on the basis of the composition of your household on the date the construction work begins. If a child is born during the year following that date, you have the right to request a reassessment of your grant based on the new household composition. The children taken into consideration for the assessment are those for whom you receive child benefit.

Income

The level of the grant is based on taxable income determined on the basis of :

• your average income for the 3 tax years preceding the date the construction work begins
• or your income for the year immediately preceding the date the construction work begins
• or your income for the year the construction work begins if :
  • you had no taxable income during the preceding years
  • your income has fallen by over 10% compared with the preceding year

The income thus considered is the taxable income increased by all other income, taxable or not, received by the applicant, the applicant's spouse, and all other members of the applicant's household excluding ascendants and descendants and excluding any family allowance or severe-disability benefits received.

In the case of joint taxation of a married couple, if the income taken into account based on the foregoing rules includes, apart from other net income, net income deriving from remunerated work performed by the spouse, who has his or her own pension scheme, the latter income, after cost-of-living adjustment, is reduced by 1,250€. The same rules apply if the applicant marries within the 2 year period following initial occupancy of the dwelling.

If the couple has been married for less than 3 years at the start of the construction work, the income of one of the two spouses is not taken into account in the calculation of the grant, which will be based exclusively on the higher of the two incomes. In this case, the deduction based on the preceding provisions is not allowed.

In the case of joint taxation of a married couple, the income of one of the two spouses is not taken into account provided the other spouse permanently ceases all remunerated work within 2 years of the initial occupancy of the dwelling for which the grant has been requested.

Construction grant may be refused if

• you have given your taxable assets to a third party
• your own financial resources or those of your spouse suffice for financing your dwelling
• you let out, even partially, the dwelling concerned
• your improvement grant application was submitted more than one year after the completion date of the construction work

Procedure to obtain a construction grant

• you can obtain a construction grant application form from the "Service des Aides au Logement, Coin avenue Gaston Diderich / boulevard Grande-Duchesse Charlotte, L-1420 Luxembourg". You will receive a multipurpose form covering all State subsidies and benefits for individual private housing.
• please fill out the application form carefully and attach all required supporting documents
• the department concerned will inform you rapidly whether or not you qualify for a construction grant or other state benefits for private housing

Source : www.logement.lu, Date : 10.05.2011, internal translation