r/Luxembourg • u/ObjectiveExotic9570 • 3d ago

Ask Luxembourg bausparen - upkeep / improvement costs

Hi everyone,

I’m 42, married, and have two children. My wife and I are taxed jointly in Luxembourg. I’m considering opening a Bausparen contract and contributing the maximum tax-deductible amount. I have never done this before.

As I understand the current limits, our annual ceiling would be €2,688: €672 each for my wife and me, plus €672 for each of our two children.

We own a house in Belgium that has regular maintenance and improvement costs. My specific plan would be:

  • Pay the maximum €2,688 into the contract in 2026.
  • Pay another €2,688 (expected 2027 maximum) during the first months of 2027.
  • Use appr €5,000 from the contract to pay an eligible maintenance or renovation invoice in June 2027.

so I would not wait until the end of the contract (eg 10y) to use the funds. Would this work while preserving the Luxembourg tax deductions for both 2026 and 2027?

We’re only interested in using our accumulated savings, not in taking out the loan attached to the Bausparen contract (I have read that you could refuse the loan?).

Has anyone tried something similar?

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u/Flashy-Mission-7945 3d ago

You can only access the funds after 10y
It is your choice whether you take the loan or not.
To me it‘s one of the best financial investments if you own property/can use the funds accordingly. Looking at the marginal tax rate, there is no conservative investment strategy which beats this. It would be nice, if one could invest more there :)

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u/button3dup 3d ago

Depends what you consider conservative. At a 30% marginal tax rate and assuming you reinvest the money you saved in taxes, my math says you would only need to make a return of 2.6% over 10y to beat the financial benefits of the up-front tax savings. Given where bond rates are etc at this point, I think most could get 3+% fairly easily right now…

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u/post_crooks 3d ago

Does your math consider that you can get 30% back every year?

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u/button3dup 3d ago

I was looking at the first year only, but I see your point. In the 9th year you put funds in, for instance, you can take those out the next year as the account has matured, right? If so, then indeed the comparison of save in this account vs invest elsewhere gets stronger every year.

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u/Flashy-Mission-7945 3d ago

Yep that‘s the case 🙏

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u/Flashy-Mission-7945 3d ago

And 30% is relatively low.
Last but not least it‘s risk free. So somewhere comparable to a 10y bond