Home savings: up to €1,344 deductible per person
Skimming?
We've prepared the shortcut for you.
Home savings (épargne-logement) is a contract with a home savings bank: you save for several years, then you get a loan under predetermined conditions for your home. Your contributions reduce your taxable income, up to a limit that is multiplied by the number of people in your household (you, your spouse taxed jointly with you, your children). The funds must be used for your home, otherwise the tax benefit can be clawed back for up to 10 years.
It's for you if
- You are saving to buy, build, renovate, or maintain the home you live in, whether in Luxembourg or abroad.
- You are a resident, or a French, Belgian, or German cross-border worker treated as a resident for tax purposes (Article 157ter LIR).
- The youngest adult subscriber to the contract is between 18 and 40 full years old as of January 1: the limit is doubled (€1,344 per household member). They must have subscribed themselves: their age alone is not enough.
Not for you if your 'PEL' is a regular savings account with a traditional bank: according to Guichet.lu, only approved home savings banks qualify for the deduction. Nor is it for you if you plan to use the money for a car or a rental property.
Key figures
| Item | Amount | Year |
|---|---|---|
| Base limit | €672 per household member | 2025 and 2026 |
| Doubled limit | €1,344 per person if the youngest adult subscriber is between 18 and 40 full years old as of January 1 | 2025 and 2026 (since 2017) |
| Household members included | You, your spouse or partner taxed jointly, each child qualifying you for a tax reduction for children (modération d'impôt) | 2025 and 2026 |
| Arrival during the year | Pro-rated limit based on full months | 2025 and 2026 |
| Combining deductions | Added on top of the insurance limit of €672 and private pension scheme | 2025 and 2026 |
| Time limit to keep the benefit | 10 years following subscription | 2025 and 2026 |
| Approved savings banks listed by Guichet.lu | BHW Bausparkasse, Wüstenrot Bausparkasse, Bausparkasse Schwäbisch Hall (check with each one if they still offer a contract) | According to Guichet.lu |
Regarding age, everything is determined as of January 1: if you are 40 full years old on that date, you keep €1,344 for the whole year, so up to and including the year you turn 41.
How to deduct your contributions
Subscribe with an approved home savings bank
In Luxembourg or another European Union Member State. The contract can be in your name, your spouse's name (if taxed jointly), or your minor children's names (ACD).
During the year: reduce your tax withholding
Resident: report your contributions on Form 164 R to have them entered on your tax card. Non-resident: Form 164 NR. Married: the MyGuichet.lu procedure for simulation or rate individualisation also allows you to declare them.
After the year: annual adjustment or tax return
Annual adjustment (Form 163 R) if you are not required to file a tax return, otherwise a tax return (Form 100). Attach your annual statement from the savings bank. Assimilated cross-border worker: Form 100. Deadline: December 31, 2026 for your 2025 income. The list of other documents can be found in documents needed to prepare your tax return.
Use the funds for your home
Purchase, construction, transformation, maintenance, or repair of your home, building land, integrated solar installation, or repayment of a loan taken for these purposes. Terminating the contract within 10 years of subscription, or using the allocated funds for another purpose within this timeframe, results in a corrective tax assessment (except in cases of death or permanent disability).
A numerical example
Let's take Tom (37 full years old as of January 1, 2025) and Sara (42 years old), married, residents, taxed jointly in class 2, with a 4-year-old child. Tom subscribed to a home savings contract with an approved savings bank. Their insurance premiums already exceed the flat-rate allowance of €480 automatically granted for these expenses (special expenses), so the calculation focuses on home savings alone.
- limit per person: Tom is the youngest adult subscriber and is between 18 and 40 years old, so €1,344
- household members: Tom, Sara, and their child, total of 3
- household limit: 3 × 1,344 = €4,032
- 2025 contributions: €3,000, fully deductible
- couple's taxable income: around €120,000; in class 2, tax is calculated on half (€60,000), in the 39% bracket (ACD)
- tax saved: 3,000 × 39% = €1,170, plus 7% employment fund contribution, totaling approximately €1,252
If Sara, 42, were the sole subscriber, the limit would drop to 3 × 672 = €2,016: only €2,016 of their €3,000 would be deductible, saving about €841. At trigger, we recommend checking who signs the contract before opening a Bausparvertrag as a couple.
Common mistakes
- Mistaking the deduction limit for actual tax savings: contributing €1,344 saves around €1,344 × your marginal tax rate, not €1,344.
- Believing the limit doubles as long as one spouse is 40 or younger: it is the age of the youngest adult subscriber that counts. If only the 42-year-old spouse signed, the limit remains €672 per person.
- Opening a regular bank account labeled 'home savings': without an approved savings bank, there is no deduction.
- Civil partners without requesting joint taxation: no increase for the partner. See joint or individual taxation.
- Terminating before 10 years to fund something other than your home: past deductions are clawed back.
Frequently asked questions
Yes. According to the ACD, the two limits apply separately. Private pension schemes have their own separate limit, explained in the 111bis private pension scheme guide.
Yes: contracts subscribed by your spouse taxed jointly with you, or your minor children, are eligible (ACD). Each child qualifying you for a tax reduction for children also adds a limit.
If you cancel within 10 years, past deductions are clawed back through a revised tax assessment. After 10 years, past deductions are retained, but if the funds are not used for your home, payments into other contracts will no longer be deductible starting the following year.
Yes: the ACD applies equally to homes located in Luxembourg or abroad, provided it is your own home.