Investing in a property in Luxembourg as a buy-to-let can be an alternative solution for diversifying your savings and generating supplementary income. But what are the key points you need to know before launching into this type of project?
What you need to know:
- The Luxembourg market continues to be buoyant and dynamic.
- The aim of a buy-to-let investment needs to be clearly defined in terms of expectations for regular income, a capital gain, tax optimisation, speculation, diversification or structuring family wealth.
- The position of the property is critical to ensuring regular income over the long term.
- There are certain advantages to buying new although the tax impacts may be more limited now that the VAT rate has been increased to 17%.
- It is also important to decide whether to buy in your own name or through an SCI (Société Civile Immobilière) company.
- The project's financing plan will depend on each investor's own financial position. This needs to be securely underpinned to ensure adequate resources and appropriate objectives.
- Generally, the investor's personal contribution is around 30% of the property's value. It is also possible to finance 100% of a property purchase using your investment portfolio as collateral.
- Rent alone cannot be relied on to service the mortgage repayment. The investor must ensure he or she has sufficient additional revenues, e.g. from an investment portfolio.
Read previous articles on buy-to-let property investments in Luxembourg:
- Tax position
- Market situation
- Buy-to-let is in demand
- Experts air their views
- What's the best investment format?
- Which financing plan?
See future publications about investing in property on the blog.