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Luxembourg's real estate chamber, the CIGDL (Chambre immobilière du Grand-duché de Luxembourg), has raised concern over the new accelerated depreciation regime, which will apply from the fiscal year 2021.

As part of the 2021 budget law, the Finance and Budget Committee has discussed the reduction of accelerated depreciation from 6% for six years to 4% for five years. 

According to the CIGDL, despite the "justified arguments" from professional real estate circles, the Finance and Budget Committee appears to have made up its mind: there will be no amendment either on the rate or on the deadline for the implementation of this measure. 

The new depreciation regime, which is considered less favourable for the lessor, will apply from the fiscal year 2021. The CIGDL argued that the "losers" of this operation are all buyers who have signed a deed for sale in future state of completion (la vente en l’état futur d’achèvement - VEFA) in recent years and whose process could not be completed before the year-end deadline. 

It is therefore with retroactive effect that the legislator will sanction the purchasers of housing intended for rental. 

Whilst the CIGDL has recognised the political basis of the decision to reduce accelerated depreciation, the chamber expressed regret regarding the "stigmatisation" of part of its clientele. The chamber maintained that the retroactive effect has further contributed to "resentment" that this is "more of a punitive action than a real budgetary measure". 

According to the CIGDL, this way of proceeding is "all the more regrettable" as significant delays have been generated by the health crisis since the beginning of the year. 

The chamber pointed out the risks in the real estate market, particularly with regard to the level of rents, concluding with the question: "Who will ultimately pay for this umpteenth political increase in housing prices in Luxembourg?"