For privately held Luxembourg property, a qualifying main residence is exempt from capital-gains tax. Other sales normally fall under the progressive scale when the property has been held for no more than 5 years. After that period, they normally fall under the half-global-rate method, which taxes the gain at half the taxpayer’s global rate. The global rate is the average tax rate on the taxpayer’s total taxable income.
This article concerns private real estate held by an individual. Property recorded in a business or professional activity follows different rules. The Luxembourg Inland Revenue’s current overview normally treats the date of the notarial deed as the sale date. If the deed makes the transfer subject to a condition, the year in which that condition is satisfied can become the relevant year.
The five-year holding test
A sale within 5 years after acquisition or construction normally produces a speculation gain under Article 99bis of the Income Tax Law. The net gain is added to taxable income and taxed at the ordinary progressive rate.
A sale more than 5 years after acquisition or construction normally produces a disposal gain under Article 99ter. This longer-held gain is calculated with an acquisition cost adjusted for inflation and benefits from the half-global-rate method. The official page states a maximum rate of 21%, before the employment-fund contribution, a surcharge calculated on the income tax.
| Time between acquisition and sale | Ordinary classification | Main rate method |
|---|---|---|
| 5 years or less | Speculation gain | Progressive income-tax scale |
| More than 5 years | Disposal gain | Half of the taxpayer’s global rate |
The temporary regime, which combined a two-year threshold with a quarter of the global rate, generally ended on 30 June 2025. A limited transition under the Law of 27 June 2025 covered deeds completed from 1 July through 30 September 2025. It required the related sale agreement to have been registered with the Registration Duties, Estates and VAT Authority by 30 June 2025. A sale completed in 2026 follows the ordinary five-year test.
Calculating the gain
The starting point is the sale price less costs directly connected with the disposal. This amount is compared with the acquisition cost. For a long-held property, eligible expenditure is multiplied by the coefficient for the year it was incurred. The table of coefficients must be the one for the tax year of the sale. The 2026 Form 700, the tax form for sales of private real estate, contains the updated coefficients for that year.
Acquisition and improvement expenditure must be supported by evidence. The current Income Tax Law and Form 700 determine which amounts enter the calculation. An unsupported estimate can mean that a lower acquisition value is used.
| Calculation step | Amount used |
|---|---|
| Sale consideration | Gross amount under the disposal |
| Less disposal costs | Costs directly linked to the sale |
| Less eligible acquisition cost | Adjusted where Article 99ter applies |
| Result | Gain before any available allowance |
The tax rate is applied after the correct classification and calculation. Quoting one percentage without the holding period and the taxpayer’s global rate can therefore be misleading.
The main-residence exemption
A gain on the owner’s main residence is exempt when the conditions in Article 102bis are met. The official main-residence guidance first covers a home occupied at the time of sale or sold by 31 December of the year after moving out. It must also have been occupied as the habitual residence since acquisition or completion of its construction, or for at least the 5 years before the sale. That duration condition is waived for a sale for family reasons or a move connected with the owner’s, spouse’s or partner’s profession.
A later sale of an unoccupied former home faces a stricter test, with conditions that must all be met. The owner must have occupied it following acquisition or completion of its construction, must not own another home available for personal use, and must have left for family reasons or a professional move involving the owner, spouse or partner. A dwelling owned but let to a third party is not another available home for this test.
The exemption also covers the normal appurtenances of the building and of the land on which it stands, meaning the ancillary parts that normally go with a home. A separate building plot or an unusually large parcel requires its own analysis rather than an automatic extension of the residential exemption.
The allowances for long-held gains
A disposal gain under Article 99ter can be reduced by a ten-year allowance. The amount is EUR 50,000 for one person and EUR 100,000 for spouses or partners taxed jointly. Allowances granted during the previous 10 years reduce the balance available. The deduction cannot create a loss.
A separate allowance of up to EUR 75,000 can apply to a building inherited in the direct line. It must have been the last main residence occupied by the parents, although they need not still have been living there at the time of the inheritance. The allowance is available for only one qualifying residence per taxpayer. For spouses or partners taxed jointly, each person’s inherited share is considered separately. This allowance is deducted before the ten-year allowance and cannot create a loss.
These allowances concern qualifying long-held disposal gains. They do not convert a short-held speculation gain into exempt income.
Inheritance and gifts
Inheritance and gifts do not themselves produce a taxable sale gain under these rules. A later sale remains capable of doing so. To determine the holding period, inherited or gifted property is treated as acquired at the time of the last acquisition for value, such as a purchase.
The acquisition cost also follows the amount paid under that last transaction for value. This continuity rule can place a later sale in the long-held category even when the heir or recipient has only recently received the property.
Non-residents and property structures
A non-resident remains taxable in Luxembourg on a gain from Luxembourg real estate. Residence status can affect the wider income-tax calculation, but it does not remove Luxembourg’s right to tax the local property gain.
Holding the property through an SCI or a company changes the analysis. An SCI is a civil company used to hold real estate. A tax-transparent SCI may attribute the result to its members, while a SARL holding property follows corporate tax and accounting rules. The private-property exemptions should not be carried into an entity-level calculation without checking the legal and tax classification.
Reporting the sale
The official reporting procedure confirms that a private sale or exchange must be reported for the year of disposal. The individual tax forms page publishes Form 700, which records the property, dates, sale price, acquisition cost and applicable classification. Its result is carried to Form 100, the individual income tax return.
The main-residence section of Form 700 can also record the facts supporting the exemption. The form should follow the notarial deed and the actual history of occupation rather than a simplified label applied after the sale.
Reviewing the tax position of a property sale
A tax consultation to examine the planned transaction, the seller’s circumstances and the points requiring further review.
