Benefits of Accelerated Depreciation

For any purchase made until 12/31/2024 (for individuals only)

Accelerated Depreciation Chapter:

Accelerated depreciation is an accounting method that allows an asset to be depreciated faster than with the standard linear depreciation method. This allows for a greater portion of the depreciation to be accounted for in the early years of the asset’s life, which can be fiscally advantageous.

Various assumptions are integrated into the model, without claiming to be exhaustive, such as the investment cost, rent, interest rate, discount rate, and current tax legislation. The variables (such as rent, interest rate, etc.) are estimated under current market conditions.

They are not guaranteed and may change over the investment period. The tax benefit is calculated by considering a marginal tax rate of 41%. Profitability is calculated based on a 6% depreciation rate, valid for the first six years. Afterward, the depreciation rate drops to 2% per year.

Purchase Value

768.000€ Including €465,000 for Construction

Apartment Rent

1.800€

Annual Rent

21.600€

Credit Hypothesis

50%

Interest Rate

4.50%

Annual Interest

17.280€

Depreciation Rate

6%

Annual Depreciation

27.900€

Taxable Income

-23.580€

Tax Benefit

9.667,80€

Repayment Capacity

31.267,80€

2.605,65 €/Months

Invest in rental properties and take advantage of favorable tax incentives!

The year 2024 offers unique opportunities for real estate investors:

New “Bëllegen Akt” Tax Credit

Up to €20,000 per person or €40,000 per couple, only for purchases in off-plan sales (Vente en État Futur d’Achèvement – VEFA). This credit is conditional upon renting out the property for a minimum period of 2 years.

Accelerated Depreciation

Benefit from a 6% rate for six years, capped at €250,000 per year, for properties intended for rental.

Reduced Capital Gains Tax Rate

Property sales signed in 2024 benefit from a reduced capital gains tax rate of 10%, provided the holding period is longer than 2 years. This measure is temporary as, starting January 1st, 2025, the rate will increase to 20% for sales after 5 years of ownership.

Beyond 2024, other tax incentives continue to encourage real estate investment:

Exemption on Net Income from Social Rental Management

Income from rentals through a social rental management organization is now 90% tax-exempt, compared to 75% previously.
This encourages owners to rent their properties through these organizations.

Increased Capital Gains Exemption for Eco-Friendly Housing Projects

Capital gains from the sale of energy-efficient properties or those dedicated to social rental management can benefit from additional tax exemptions.