What are the benefits of home savings?
01 JAN. 2019 PROPOSED BY OUR PARTNER ING LUXEMBOURG
Thinking of buying a property or transforming your existing home in the future, in the medium or long term? Why not choose the housing savings plan? This contract allows you to benefit from a loan on advantageous terms for the financing of your principal residence. Under certain conditions, tax deductions are also possible. Explanations.
The purpose of the home savings plan is to finance the construction, acquisition or conversion of an apartment or house used for personal housing needs, including the price of the land. It usually consists of two parts: the savings part and the credit part.
During the first phase, you make free and flexible payments to a home savings account to make up part of the amount required to finance your home savings. Thanks to your savings payments, you acquire the right to a home savings loan at a favorable interest rate and fixed in advance in the contract. In addition, payments placed on your home savings account will generate interest (also guaranteed at the signing of the contract) that will increase, as and when your savings.
If you are already a homeowner, you can also consider the Home Ownership Savings Plan as a "health insurance" for your home, which will allow you to save money in case unexpected home costs arise. .
Tax deductible contributions
Under certain conditions, contributions and interest income may be tax deductible for resident and non-resident assimilated taxpayers.
The first condition is that the contributions must be paid to an approved savings bank in Luxembourg or another EU country. If you buy a home savings plan from your bank, it will contact a partner home savings bank. Only 3 savings banks are currently licensed in Luxembourg.
The second condition is the contract period . This one must be ten years old. If you terminate your home-purchase savings plan before the 10-year date (the date the funds are allocated), you remove the deductible from the contributions paid. Contributions already deducted will be considered as not eligible for deduction. You will therefore be subject to a correction to your disadvantage. On the other hand, contributions are deductible if you use your savings to invest in a new home or renovate your current home . In this case, you will have to prove to the authorities that these funds will be used for your accommodation.
Since the 2017 fiscal year, you can no longer use your home-savings plans as you see fit if you want to continue to benefit from tax deductions after the ten-year period. If the accumulated home equity capital is not used for your personal housing needs, future tax deductions will no longer be possible, regardless of when the contract was entered into (even if the contract has exceeded ten years before 1 January 2017).
The maximum deductible amount is set based on your age. If you are between 18 and 41 years old, it is 1,344 euros. If you are over the age of 41, it is 672 euros. This limit may be increased by its own amount (€ 1,344 or € 672) for spouses or taxable partners collectively and for each child.
State guarantee for a home loan
Then comes the credit phase. The savings you have accumulated will be used as a basis for a global loan or combined with a mortgage loan . Specifically, home savings will allow you to borrow the same amount of capital saved and enjoy advantageous conditions, including a low interest rate and fixed for your credit.
Finally, home savings can be very useful if you can not provide sufficient guarantees to borrow the necessary money. The State may, under certain conditions, grant you its guarantee to take out a housing loan. Among these conditions is the fact of having a home savings account with a single bank with a regular annual deposit of 290 euros for at least 3 years.
Interest rates , guaranteed interest, tax deductions, state guarantee: you have everything to gain by subscribing to a home-ownership savings plan!
For more information, please visit www.ing.lu/immo or visit us at the branch.
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