Interest subsidy
State assistance with the payment of interest rates granted to reduce monthly charges on a mortgage loan taken out for the construction, purchase, or improvement of a home. The interest subsidy depends on your taxable income and the composition of your household and its rate can range from 0.125% to 1.75%.
Conditions
1. to qualify you must have a mortgage from a financial institution for the purposes of constructing, buying, or improving a home located in the Grand Duchy of Luxembourg, which will effectively constitute your household's principal and permanent residence for a minimum period of 10 years. Up to 175,000€ of a mortgage loan per dwelling is taken into account provided the loan was contracted at the social interest rate with a financial institution or a pension fund institution coming under the social security system. In the case of a mortgage loan taken out only in order to make one or more investments covered by the regulations introducing a scheme of assistance to natural persons in the matter of the rational use of energy and the exploitation of renewable energy resources, up to 50,000€ per dwelling is taken into consideration.
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 calculation of the subsidy is based on the household composition existing on the date the interest subsidy is allocated.
Income
The interest subsidy is based on taxable income determined on the basis of your income for the year immediately preceding the year for which the interest subsidy is due, or your last known income if you have no income, your income for the preceding year is unknown, or your revenue has decreased substantially.
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.
Interest subsidy may be refused if
- you have given your taxable assets to a third party
- your income exceeds the admissible limit
- you let out, even partially, the dwelling concerned
- you are not paying interest at the social rate on your mortgage (1.75% since 1 February 2009)
Calculation of an interest subsidy
The interest subsidy is calculated on the basis of the interest falling due according to the repayment schedule established by the lending institution. Each case is automatically reviewed every 2 years.
Procedure to obtain an interest subsidy
- you can obtain a subsidy application form for home construction, purchase, or improvement from the "Service des Aides au Logement (Housing Benefits Department of the Housing Ministry), 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 whether you qualify for an interest subsidy or other state benefits for private housing
Source : www.logement.lu, Date : 10.05.2011, internal translation