The state should earn less from real estate transactions to help alleviate costs for households, a petition says Photo: Matic Zorman / Masion Moderne

The state should earn less from real estate transactions to help alleviate costs for households, a petition says Photo: Matic Zorman / Masion Moderne

Luxembourg should lower registration and transcription fees on property sales, a petition urges, as buyers face an extra 7% levy on already expensive real estate.

Under current rules, buyers must pay a 6% registration fee and a 1% transcription fee when buying a home in Luxembourg. A one-off tax credit of €20,000 is available per buyer but as real estate prices keep climbing this amount does not cover costs.

For example, on 24 March by Statec shows that the average price per square metre for a new apartment in Luxembourg City is €12,216. Under this calculation, a 35m2 studio should cost €427,560, although real prices in the capital can be substantially higher.

A single buyer would have to pay an extra €29,929 in taxes, meaning nearly €10,000 in additional costs when subtracting the tax credit. For an average house in the capital--at €1.45m according to the Statec report--another €101,500 would have to be budgeted in taxes.

A that opened for signature on 25 March says that the taxes should be reduced to 4% to help households cover costs for a new property. The document also argues that investors buying properties are passing on the cost to tenants through higher rent.

Economy minister Franz Fayot (LSAP) that real estate agencies should no longer be able to charge a 3% commission, arguing that this incentivises them to drive up prices.

Market players had that in most transactions they cannot charge this amount as sellers wouldn’t cough up this kind of cash for their services.

“The biggest winner of the unhealthy evolution of the prices of the real estate market is the state (registration fees, capital gains, VAT, income taxes, rents etc.) and not the real estate agencies,” the petition says.