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Estate agent fees on a property sale: are they deductible?
Selling a property in Luxembourg? Your estate agent's commission can shrink your taxable capital gain. Here's how, and taxx.lu does the maths for you.
Selling a property is good news. Paying the agent's commission on top, slightly less so. The silver lining: in many cases, that commission reduces the capital gain you're taxed on. Here's when it applies, how it works and what to watch out for.
Selling your main residence? There's no gain to tax
Let's start with the best-case scenario. If you sell your main residence, the gain is in principle exempt from income tax (articles 99bis and 102bis of the Luxembourg income tax law, LIR). No taxable gain, so nothing to deduct.
Agent fees really come into play for other property: a second home, a buy-to-let flat, a building plot, or a former home that no longer qualifies as your main residence.
Tax-free doesn't mean paperwork-free
Even when the sale of your main residence is exempt, you still have to declare it to the tax authority, the Administration des contributions directes (ACD).
How the taxable gain is worked out
For a taxable property, the gain isn't simply your selling price minus what you paid. It works like this:
- the sale price, as stated in the notarial deed
- minus the acquisition cost, meaning what the property cost you, revalued if you've owned it for a long time
- minus your deductible expenses, meaning the costs directly linked to the sale
That last line is where your agent fees live.
Agent's commission counts as a deductible expense
Deductible expenses (frais d'obtention, in ACD terms) are the costs you incur directly because of the sale. The commission you pay your estate agent is one of them, so it comes off your taxable gain.
Other sale-related costs can count too, such as the energy performance certificate (passeport énergétique) you need before you can put the property on the market. Keep your invoices: the ACD may ask for them.
A worked example (illustrative)
You sell a buy-to-let flat for €500,000. You bought it for €400,000. You paid €15,000 in agent's commission.
Without the commission, your gain would be €100,000. With it deducted, it drops to €85,000.
That's €15,000 less in your taxable base. Real figures depend on your situation and on any revaluation of the purchase price.
Three conditions
The commission is only deductible if you actually paid it as the seller, the invoice is in your name, and it relates to this specific sale. If the buyer pays the commission, it doesn't reduce your gain.
How much tax on what's left?
Once the gain is calculated, the rate mainly depends on how long you've owned the property.
Short holding period: the gain counts as a speculative gain and is taxed at the ordinary progressive rates, up to a maximum of 42%.
Longer holding period: it becomes a capital gain on disposal, taxed at a reduced rate, and the purchase price is revalued. On top of that, you get a €50,000 allowance per person (€100,000 for a couple taxed jointly), which you can use once every ten years.
In principle, the switch between the two regimes happens at around five years of ownership.
Thresholds and rates move
The line between speculative and disposal gains, and the rates that apply, have been temporarily adjusted several times in recent years. Which rules apply depends on the year of sale and your situation. The ACD always sets the final tax.
Where to declare the sale
You declare the sale for the year the notarial deed was signed, using form 700, the annex for capital gains on property, attached to your tax return (form 100). That's where you enter the sale price, the acquisition cost and your deductible expenses, agent's commission included.
taxx.lu does the maths
Capital gain, revalued purchase price, deductible expenses, allowance: that's a lot of moving parts. taxx.lu fills in form 700 with you, applies the right amounts and puts your agent fees in the right box. You keep the invoices, we handle the rest.
In short
Selling is expensive enough. No point paying tax on costs the law lets you deduct. Not sure your property counts as your main residence? Our property sale simulator tells you in a few questions whether your gain is tax-free.
Ready to declare your sale without the headache? Get started on taxx.lu.
