The Cost of Buying a Property

Understand the taxes, fees and mortgage costs involved in buying property in Luxembourg...

Financing a Property Purchase

Mortgages are available with most retail banks. To provide a mortgage, banks may require that the person pays in their salary or wage to a current account. A life insurance policy is usually required and made available by the lending bank, although any insurance company can be used if there is evidence that the lending bank is the beneficiary.

Experts and valuations

The mortgage company may require a survey of the value of the property by an expert valuer. The buyer must pay the fees for this and the expert must be approved by the financial company involved in the mortgage application.

This is not the same as the survey carried out under the British or American system and does not always alert the buyer to potential problems with the building. The value assessed is often the replacement value or forced sale value rather than the market value.

Notaries' Fees

A notary is required for all transactions. Notaries are qualified lawyers entitled by law to administer property transactions. Their fees are fixed by law (with the exception of ancillary out-of-pocket expenses) and these costs are paid for by the buyer. If more than one notary is involved (one for the seller, one for the buyer), the fees are shared between them. A notary can be freely chosen by both parties.

Notaries' fees are fixed by law and depend on the value of the purchase. Notary fees as understood in current transactions include the following:

  • Actual notary fees, as fixed by law
  • Land transfer taxes paid by the notary on behalf of the buyer. 
  • Miscellaneous fees (for example mortgage registration)

The land transfer tax rate is usually 7%. There is however a tax credit when the buyer acquire the property as a main residence. The tax credit is 20,000€ for an individual or 40,000€ for a couple (married/PACS).

Property taxes

Annual property taxes are based on a notional rental value (valeur unitaire) of the property and rates vary in each commune; they are low compared to neighbouring countries. It is recommended to obtain an indication from the seller, although the notional rental value can be reviewed at any time, usually once every ten years.

Rente Viagère

It is possible to buy occupied or non-occupied properties using the principle of the rente viagère. The buyer pays an initial upfront lump sum, le bouquet, to the seller, then a monthly allowance until the death of the owner. Prices are generally based on property value and mortality tables. It is recommended to get assistance from a notary and/or a lawyer.

Auction Sales

Auction sales are usually due to repossession of a property. It is recommended to get assistance from a notary and/or a lawyer. Auction sales are listed in most national newspapers and at notaries' offices.

Content acknowledged as factual and correct by Mr Abby Toussaint, Immobilière Toussaint, 23 Rue Nicolas Welter, L-7570 Mersch