You sell your principal residence. Your property gain is exempt from tax. To be considered your primary residence, you must occupy your dwelling at the time of the sale, or the sale is made no later than December 31 of the year of your move. In addition, you must meet one of the following conditions:
- you have occupied your property after its acquisition or completion, or; - you have occupied it for at least five years preceding the sale, or; - you sell your property for family or professional reasons.
The Luxembourg Inland Revenue (Administration des contributions directes - ACD) provides an (in French) for determining if the residence you want to sell can be considered the main residence.
What happens if you sell a real estate which is not your main residence (sale on an inherited property, a second home, a rented property, etc.)? A tax rate will apply in this case, but this will depend on how long you already own this property.
You sell your property less than two years after its acquisition. The property gain you make is considered a speculation profit and taxed at ordinary progressive rates. Depending on your level of annual taxable income and your family situation, the marginal rate is set at 42% maximum. The costs of the sale, such as the commission of the real estate agency that carried out the transaction, are deductible. The date to be considered the date of acquisition is the date of the notarial deed by which you acquired the property. In case of an acquisition free of charge (donation of inheritance), the date of acquisition is the date on which the previous owner bought the real estate.
You sell your property more than two years after its acquisition. Your income earned is called a capital gain on the sale and is taxed at half of the global rate (maximum 21%). In addition, it benefits from a ten-year reduction of EUR 50,000 (EUR 100,000 if you and your spouse or partner are imposed collectively). In other words, the counters are reset to zero every ten years and you can benefit from this reduction again. For example, suppose you are married and you sold a property in 2012 with a capital gain of EUR 60,000. As the reduction is EUR 50,000 for each partner taxed collectively, you can benefit from a reduction of EUR 60,000 and reduce the capital gain to zero. You are therefore not taxed at all, and you still have EUR 40,000 of tax relief that you can use on another property gain until 2022 (2012 + 10). So, if you sell another property this year and make a capital gain of 100,000 EUR, you can deduct the remaining EUR 40,000 and will only be taxed on EUR 60,000. Or you wait until next year to sell your property! Then, you can benefit again from the ten-year reduction of 100,000 EUR and if you earn the same capital gain as expected in 2022 - EUR 100,000 -, you are exempt from tax. As you can see, it is in your interest to sell your property after two years.
Your property gain is also subject to solidarity tax and long-term care insurance. The Luxembourg Inland Revenue calculates the contribution due.
And if you sell a property abroad? In principle, an income related to selling a property located abroad is exempt from tax.
Are you a resident or non-resident who opted to be considered a resident taxpayer and sell a property located in Luxembourg or abroad or a non-resident selling a property in Luxembourg? Whatever your situation, you have to report your real estate sale to the Luxembourg Inland Revenue by submitting your tax return (form 100) with the relevant annexe (form 700). These forms are downloadable .
Are you an expat or a newcomer? Visit our .