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How to declare your rental income in Luxembourg
Rent, interest, depreciation, the 35% flat rate: here's how to declare your rental income in Luxembourg, and everything you can actually deduct along the way.
You rent out a property, and you're already picturing the taxman pocketing every euro of rent? Relax. The State doesn't tax what your tenant pays you. It taxes what's left once your costs are covered. And that "what's left" is usually a lot smaller than you'd think.
Here's how to declare your rental income in Luxembourg, and everything you can knock off along the way.
Who has to declare rental income?
Rent isn't taxed at source. Nobody deducts the tax for you. So if you let a property, declaring it is on you.
Are you a cross-border worker or non-resident filing a return in Luxembourg, say to be treated as a resident? Then you have to declare your whole household's income, including rent earned abroad. That foreign rent isn't taxed twice in Luxembourg: it only feeds into working out your tax rate.
Heads-up
Declaring your rent isn't optional. Even if the maths ends in a loss, the obligation to declare still stands.
How is net rental income worked out?
The formula fits on one line:
Net rental income = gross rent received (excluding charges) − income-related expenses actually paid
Two words matter here: "received" and "paid". What counts isn't what you're owed, but what actually changed hands during the year. An invoice you've received but not yet settled doesn't count. Rent that's been billed but never paid doesn't either.
Example
You collect €18,000 in rent over the year. You pay €5,000 in loan interest, €1,200 on upkeep and €800 in various costs. Your taxable net income isn't €18,000, it's €11,000. That's the figure that feeds into your tax.
What you can deduct
1. Income-related expenses
These are all the costs of earning and holding on to your rent:
- upkeep and repairs;
- debit interest on your property loan;
- management fees;
- land tax and communal charges (sewerage, refuse collection);
- insurance and charges you don't recover from your tenant.
Here's what often surprises people: on a let property, the interest on your loan is deductible with no ceiling. None at all.
And if your property sits empty for a few months, between tenants or while you finish some works? Your income-related expenses stay deductible anyway.
2. Depreciation
A building ages, and the taxman accepts it. Each year you can deduct part of the building's value: that's depreciation.
Two rules to remember.
The base. Depreciation applies to the building, never the land. By default, the tax authority treats 20% of the price as land, unless your notarial deed proves a different split.
The rate, which depends on the age and purchase date of the property (simplified overview):
- 2% a year: the standard rate, with no time limit.
- 4% for 5 years: the accelerated rate, for a property bought after 31 December 2020 and completed less than 5 years ago. It's capped at 2 properties per taxpayer (4 for a couple filing jointly).
- 6% for 6 years: for a rental home bought in 2024 through an off-plan purchase deed (VEFA), up to €250,000 a year.
- 6% for 9 years: for sustainable energy-renovation works that received public funding.
A small bonus when the 4% rate applies: you're entitled to a special property allowance of 1% of the depreciation base, capped at €10,000 a year (doubled for joint filing). It's applied automatically by the tax office, with nothing for you to do.
New in 2026
The "Booster fir de Wunnengsbau" package (presented on 16 July 2026) introduces a new accelerated depreciation known as "3×6": 6% a year for 6 years if the depreciable base is €600,000 or less per building; above that, the standard 2% applies to the whole base with no time limit. For a 2026 acquisition you can choose the old or the new regime; from 1 January 2027 the new regime becomes the rule for new acquisitions. Subject to the law being adopted.
With taxx.lu
You enter the purchase date, the price and the land share. taxx.lu works out the depreciable base, the applicable rate and the deductible amount for you, then fills in the boxes on form 190/210.
The flat-rate option: 35% without the headache
Is your property at least 15 years old? You can skip the detailed sums on upkeep and depreciation, and opt for a flat-rate deduction of 35% of gross rent.
The catch: this flat rate is capped at €2,700 a year per property. In plain terms, once the rent goes above roughly €650 a month, the real-cost method usually wins again.
Worth knowing: even if you take the flat rate, you still deduct your loan interest, management fees and communal charges separately. The flat rate doesn't swallow them.
The social-letting bonus
Handing your property to an approved social-letting body (gestion locative sociale)? From tax year 2024, 90% of your net rental income is exempt from tax.
The rent is lower than on the private market, but it's guaranteed every month, and the exemption more than makes up the gap.
In short
- Declare the gross rent you've collected.
- Deduct your income-related expenses: interest (no ceiling), upkeep, management, land tax and charges.
- Depreciate the building, never the land, at the rate that fits your property.
- Consider the 35% flat rate if your property is over 15 years old, but check first that it beats the real-cost method.
- Declare it all on form 190/210, alongside your main return.
