Taxation of property capital gains in Luxembourg
In Luxembourg, property capital gains realised on sale are subject to income tax. The tax regime differs depending on the holding period, pursuant to the amended law of 4 December 1967 on income tax (LIR).
- Speculation profit (art. 99bis LIR): sale within 2 years — taxed at marginal rate (up to 45.78%)
- Disposal profit (art. 99ter LIR): sale after 2 years — taxed at half the global rate
Speculation profit: sale within 2 years
When property is sold within 2 years of acquisition, the gain constitutes a speculation profit taxed at the full marginal rate (up to 42% + 7% employment fund contribution = 45.78% in 2025). No standard deduction applies.
Disposal profit: sale after 2 years
Capital gains realised after more than 2 years benefit from a favourable regime:
- Acquisition price is revalued using ACD coefficients
- EUR 50,000 allowance every 10 years (EUR 100,000 for couples)
- Net gain taxed at half the global rate
Exemptions and special cases
Several situations allow total or partial exemption:
- Primary residence: sale is exempt if the owner resided there continuously since acquisition or for at least 5 years before the sale
- Inheritance/donation: inheritance uses fair market value at date of death (step-up basis)
- Expropriation: compensation for public utility is exempt under conditions
Frequently asked questions about property capital gains
How is property capital gain calculated in Luxembourg?
Capital gain = Sale price - (Revalued acquisition price + acquisition costs + revalued works). The acquisition price is adjusted by ACD coefficients for inflation. A EUR 50,000 allowance is available every 10 years.
What is the tax rate on capital gains?
Speculation (< 2 years): full marginal rate (up to 45.78%). Disposal (> 2 years): half the global rate, approximately 20-23%. Primary residence is exempt under conditions.
How does the EUR 50,000 allowance work?
The EUR 50,000 allowance (EUR 100,000 for couples) is granted on disposal profits and renews every 10 years.
Is the primary residence exempt?
Yes, sale of the primary residence is exempt if you resided there continuously since acquisition or for at least 5 years before the sale (art. 102bis(2) LIR).
How do I declare a property capital gain?
The gain is declared in the annual tax return (model 100/100F), form 700 for disposal profits. The notary notifies the ACD of every property transaction.