What is being compared
One yardstick only: total net worth in the year you sell, under two paths.
- Buyer: property value, minus outstanding mortgage, minus selling costs, minus the running costs of ownership, plus the Luxembourg tax benefits collected each year.
- Renter: a portfolio seeded with the exact cash the buyer sank upfront (deposit plus acquisition costs), then fed every year with the difference between the owner's cash outlay and the rent actually paid.
Whoever holds more net worth at your horizon wins. The model projects 40 years and lets you set the sale year anywhere inside it.
Every default, in one place
All of these are inputs. Every one can be changed, and the result recalculates live.
| Input | Default | Basis |
|---|
| Inflation | 2.5% / yr | Anchor for appreciation and rent. ECB target is 2%; long-run and post-2022 data sit higher. 2.5% splits the difference. |
| Rent increase | 2.5% / yr, compounding | Tracks inflation by default, i.e. real rent is flat. Untick "tracks inflation" to set any rate from 0% to 6%. |
| Rental charges (tenant) | €150 / mo, rising 2.5% / yr | Recoverable charges only: water, common heating, lift, cleaning. Compounds at the same rate as rent. |
| Owner’s co-ownership charges | €300 / mo, rising 2.5% / yr | Full syndic bill including the fonds de travaux (mandatory since 1 August 2023). Raised from €250 in the 2026-05-28 audit to match the French ARC OSCAR co-ownership observatory (about €44-50 per m² a year). |
| Property appreciation | 2.5% / yr | Tracks inflation, i.e. zero real growth. BCL data shows long-run real appreciation near zero; its 2026 Financial Stability Review puts overvaluation at 6.8% at end-2025, down from about 13% a year earlier. |
| Portfolio return | 7.5% gross, 7.3% net | About 5% real above 2.5% inflation, less 0.2% ETF fees. PWL Capital's long-run estimate for global equities is 4.6% real; Vanguard's 2026 ten-year outlook is below that for US equities and near it for non-US developed markets. 7.5% nominal is a fair central case, not a cautious one. |
| Purchase price | €1,000,000 | Apartment, Class 2 joint filing, €180,000 gross household income, no children. |
| Monthly rent compared | €2,200 | The rent for an equivalent property. The single biggest driver after holding period. |
| Down payment | 20% | Typical Luxembourg bank requirement. The State Guarantee allows eligible first-time buyers up to 100% LTV. |
| Mortgage | 3.6% over 30 yrs | Luxembourg fixed rates for a primary residence sit in the 3.5-4% range. |
| Acquisition costs | 6% + 1% + ~1% | Registration duty, transcription fee, notary fees; plus about 1% of the loan for the mortgage deed and bank opening commission. Bëllegen Akt credit (€40k single / €80k joint) deducted. |
| Selling costs | 3.5% of value | Agent plus prep. Applied in the sale year only; "Never sell" removes them entirely. |
| Maintenance reserve | 0.7% / yr of building | Applied to the building portion only, since land needs no upkeep. Aligned to the Peterssche Formel. Houses default to 1.75%. |
| Building / land split | 40% building | Land is the main value driver in urban Luxembourg, not the building. |
| Insurance | 0.07% / yr of value | Owner’s top-up above the syndic’s policy on common areas. |
| Property tax | €200 / yr, flat | The Luxembourg impôt foncier is small enough that a flat figure changes nothing material. |
| State interest subsidy | 1.5% | Income-tested, 0.25% to 3.50% by tier. Applied to the outstanding balance up to €200k + €20k per child, capped at €280k. |
What the model prices that people assume it does not
- Rent rises every year — 2.5% by default, compounding over the whole horizon, and the tenant’s charges compound with it. The renter is never compared against a frozen rent.
- The owner’s costs rise too. Co-ownership charges compound at inflation, and maintenance and insurance are recalculated each year against a property value that is itself growing. This is not a rent-inflation-only comparison.
- The renter is given the buyer’s full upfront cash — deposit and acquisition costs both — as the opening portfolio balance, not just the monthly difference.
- The interest deduction decays. Because interest is front-loaded in any amortisation schedule, the tax benefit is largest in year one and shrinks every year after. That decay is what makes the buy case front-loaded rather than permanent.
- Both the state and employer subsidies are capped at the interest actually paid that year, and fall to zero once the loan is repaid.
- Capital gains tax is zero for a primary residence, which is the case this tool is built for. Unticking the exemption applies a simplified estimate so the value of the exemption is visible.
Known simplifications
Stated so you can judge which way each one cuts.
- The portfolio return is deterministic. A flat 7.3% every year prices no sequence-of-returns risk and no drawdowns. Real equity paths are far lumpier, and a bad decade early hurts the renter more than this model shows.
- The renter has to actually invest the difference. This is the renter case’s single biggest point of failure, and no model can verify it.
- The capital gains estimate, where it applies, overstates tax. It works on the nominal gain without revaluing the acquisition price for inflation, and does not add acquisition fees to the cost base. The abatement is applied as a one-off rather than per person per ten years, and the marginal rate excludes the solidarity surcharge. It only ever bites when the primary-residence exemption is unticked.
- Tax class 1a is approximated with the class 1 scale. Class 1a (single with a dependent child, widowed, or 65 and over) has its own lighter scale with a higher tax-free band (€26,460 in 2025 against €12,438 for class 1). The tool does not model it, so for those households it overstates income tax and the mortgage burden and slightly overstates the value of each deduction.
- Property tax is flat at €200 a year rather than modelled from the unitary value.
- Moving costs, vacancy periods and the opportunity cost of a rent deposit are not modelled. All three are small next to the levers above.
- Tax rules are those in force in September 2026, including the five-year speculative period for capital gains (from tax year 2025) and the post-2024 uncapped interest deduction for a primary residence in the move-in year and the year after. The sourced figures on this page were re-checked against their primary sources on 6 September 2026.
If you think a default is wrong, change it. Every number above is a slider or a tick box, and the chart redraws as you move it. The useful disagreement is never "the model ignores X" — it is "X should be 3.4%, not 2.5%". Set it, and see what it does to the crossover year.
Educational tool, not financial, tax or legal advice. Figures are nominal euros. Verify current rules at
guichet.lu or with an authorised professional before deciding anything.