How Are Real Estate Capital Gains Taxed in Luxembourg?

In Luxembourg, capital gains from selling real estate are taxable under two distinct regimes: speculation profit if the resale occurs less than 2 years after acquisition (Art. 99bis LIR), or transfer profit if it occurs after 2 years (Art. 99ter LIR). The tax rate, allowances and exemption possibilities depend on the holding period and property use. Full exemption is possible for the personally occupied primary residence.

Speculation Profit (< 2 years)

When the resale occurs within 2 years of acquisition, the capital gain qualifies as speculation profit (Art. 99bis LIR). It is fully added to taxable income and taxed at the progressive income tax rate (marginal rate up to 42% + employment fund contribution of 7 to 9%, giving a maximum effective rate of approximately 45.78%). No specific allowance applies. The capital gain is calculated as the difference between the sale price and the acquisition price increased by deed costs and improvement works.

Transfer Profit (≥ 2 years)

When the disposal occurs more than 2 years after acquisition, the capital gain is a transfer profit (Art. 99ter LIR). It benefits from a more favourable tax regime: only one quarter of the overall tax rate applies (Art. 102bis para. 1 LIR). The acquisition price is revalued using the construction price index revaluation coefficient published by STATEC. A decennial allowance of €50,000 per person (€100,000 for a jointly taxed couple) is deducted from the taxable capital gain (Art. 130 para. 4 LIR). Example: a property purchased for €400,000 in 2010 and sold for €700,000 in 2025, with a coefficient of 1.25, gives a revalued price of €500,000 and a gross capital gain of €200,000.

Exemptions

The most common exemption concerns the primary residence: the capital gain is fully exempt if the property is the seller's primary residence at the time of disposal and they have effectively and continuously occupied it for the 5 years preceding the sale (Art. 102bis para. 3 LIR). A tax deferral (reinvestment) is possible if the sale proceeds are reinvested in another owner-occupied primary residence within 2 years (Art. 102bis para. 2 LIR). For land, a deferral regime is also possible under certain conditions. Gratuitous transfers (gift, inheritance) do not trigger capital gains taxation for the donor/deceased, but the beneficiary assumes the historical acquisition price.

By Erwan Bargain, REV TEGOVA · Updated: April 2026