Selling real estate in Luxembourg triggers capital gains taxation that depends primarily on one factor: how long you held the property. The tax regime draws a clear line between short-term speculation gains and long-term disposal gains, each carrying very different rates. A temporary measure applicable until June 30, 2025 further altered these thresholds, creating a window of opportunity for certain sellers.

The main residence enjoys total exemption from capital gains tax, provided specific occupancy conditions are met. Even so, every property sale must be declared to the tax administration via form 700, whether or not the transaction is taxable. Owners holding property through structures such as an SCI or a SOPARFI face additional considerations around tax transparency and entity-level treatment.

This guide covers the calculation methodology, applicable rates, exemptions, allowances, and special situations — including inheritance, non-resident taxation, and the temporary deferral mechanism under Article 102quater LIR.

1. Two tax regimes based on holding period

Luxembourg distinguishes between speculation gains (holding period of 5 years or less) and disposal gains (holding period exceeding 5 years). A temporary measure reduced the speculation threshold to 2 years for sales completed between January 1, 2024 and June 30, 2025.

Regime	Holding period	Tax rate	Notes
Speculation gain	≤ 5 years (2 years until 30/06/2025)	Progressive scale, up to 42%	Combined with other income
Disposal gain (standard)	> 5 years	Half global rate, max 21%	Extraordinary income
Disposal gain (special period 2024–2025)	> 2 years	Quarter global rate, max 10.5%	Temporary measure
Main residence	Occupied at sale or ≥ 5 years	Total exemption	Declaration still mandatory

Note: The rates of 42% and 21% are excluding social contributions (Employment Fund and dependency insurance), which slightly increase the effective burden.

2. Calculating the taxable capital gain

2.1. Acquisition price

The acquisition price includes the purchase price paid, all acquisition costs (notarial fees, agency commissions), and subsequent improvement works. For holdings exceeding 5 years, indexation coefficients published by the tax administration adjust the acquisition price to neutralise inflation. Depreciation deducted from rental income is not recaptured upon sale — a notable advantage compared to many foreign regimes.

2.2. Net sale price

The net sale price equals the amount received minus costs directly related to the transaction (agency fees, notarial costs for the sale). Loan interest is not deductible from the capital gain; it is deducted separately under rental or personal residence income rules.

2.3. Formula

Element	Amount
Net sale price	Sale price − selling costs
Indexed acquisition price	(Purchase price + acquisition costs + improvements) × indexation coefficient
Gross capital gain	Net sale price − indexed acquisition price
Decennial allowance	Up to €50,000/person (€100,000/couple)
Taxable capital gain	Gross gain − allowance

3. Main residence exemption

The main residence is fully exempt from capital gains tax when any of the following conditions is met:

• The owner occupies the property at the time of sale
• The property is sold by December 31 of the year following relocation, provided continuous occupancy since acquisition or for at least 5 consecutive years
• Relocation is justified by family or professional reasons recognised by the administration

3.1. Land and outbuildings

Situation	Treatment
Land ≤ 10 ares (1,000 m²)	Presumed normal outbuildings — fully exempt
Land > 10 ares	Exempt up to 15 × built-up area
Independent building plots	Excluded from exemption, taxed normally

Important: Even fully exempt main residence sales must be declared via form 700 attached to form 100.

4. Decennial allowance

The decennial allowance exempts up to €50,000 per person (€100,000 for couples under collective taxation) from disposal gains over a rolling 10-year period. The allowance can be split across multiple disposals. Amounts used become available again after 10 years — for example, €30,000 used in 2025 frees up again in 2035.

5. Inheritance and donation

For inherited property, the deceased’s holding period transfers to the heir, preserving access to the more favourable disposal gain regime. For donations, the donor’s acquisition date is retained.

An exceptional allowance of €75,000 applies when a child sells their parents’ former main residence.

6. Tax deferral — Article 102quater LIR

Luxembourg has no general tax deferral mechanism for reinvesting disposal proceeds into a new main residence. However, an exceptional temporary mechanism under Article 102quater LIR applied to disposals between January 1, 2024 and June 30, 2025. Deferral was available only for reinvestment into:

• New housing meeting energy class A+
• Housing intended for social rental management

The request required filing form 700 with its annex 700.

7. SCI and holding structures

Luxembourg civil real estate companies (SCI) operate under tax transparency: gains are taxed at the partner level proportionally, not at the entity level. Partners can therefore benefit from individual exemptions and allowances (main residence, decennial allowance) when conditions are met. For commercial structures like a SARL, corporate tax rules apply instead.

8. Non-resident sellers

Non-residents are taxed on Luxembourg real estate capital gains under the same rules as residents. Key points:

• No withholding tax is applied on the sale price
• A tax return must be filed with the Luxembourg administration
• Under certain conditions, non-residents may request assimilation to residents to access additional tax advantages

9. Practical example

A couple acquired a secondary residence in 2018 for €500,000, with €40,000 in acquisition costs and €60,000 in improvements (total: €600,000 before indexation). They sell in 2025 for €750,000 with €30,000 in selling costs.

Step	Calculation	Amount
Net sale price	€750,000 − €30,000	€720,000
Indexed acquisition price	€600,000 × coefficient	~€620,000 (illustrative)
Gross capital gain	€720,000 − €620,000	€100,000
Decennial allowance (couple)		−€100,000
Taxable gain		€0

If the gross gain exceeded the allowance, the applicable rate would depend on the deed signature date: quarter global rate (max 10.5%) before June 30, 2025, or half global rate (max 21%) thereafter.

10. Declaration obligations

Every real estate sale must be declared, even when exempt. The declaration is made via form 700 attached to income declaration form 100. The relevant date is the notarial deed signature. Required documents include the sale deed, proof of acquisition price and costs, and any evidence of main residence status.