13. Real estate sale

The sale of a real estate property, whether located in Luxembourg or abroad, must be reported in your tax return.

For the sale of a residence, two situations should be distinguished:

Sale of your main residence

Verification with the simulator

The notion of "main residence" is not always obvious, as it depends on several criteria, such as the length of occupation or the actual use of the property. To avoid any mistakes, it is therefore recommended to check whether your property meets this definition. You can use the Main Residence Simulator to determine whether the exemption conditions are met.

Tax exemption

If you sell your main residence, the capital gain realized is fully exempt from tax in Luxembourg. In other words, you do not have to pay tax on the profit made from the sale, provided that the property was indeed occupied by you as your main residence.

Mandatory declaration

Even in the case of an exemption, you must still declare the sale. To do this, complete the "Transfer" section in your tax return, and also fill in the first page of form 700.

Sale of a property other than the main residence

Taxation of capital gain

If you sell a property that is not your main residence, the capital gain realized is, in principle, taxable in Luxembourg.

Supporting documents

To correctly declare this transaction, it is necessary to provide a copy of the notarized sales deed. This official document can be obtained:

From your notary's office that conducted the transaction.

From the mortgage registries, depending on the district where the property is located:

• First office: Luxembourg, Mersch, Grevenmacher, Remich
• Second office: Esch/Alzette, Capellen
• Diekirch office: Diekirch, Clervaux, Echternach, Vianden, Redange, Wiltz

A copy of the deed is essential to justify the sale amount and allow the correct calculation of the capital gains tax.

Calculation of capital gain

When selling a property, the amount of the capital gain and the method of taxation depend on the holding period of the property.

Two cases should be distinguished:

1. Speculation gain (sale within 2 years of purchase)

• Calculation: The capital gain corresponds to the difference between the sale price and the acquisition price of the property.
• Taxation: This gain is subject to the progressive income tax scale, which may result in a higher tax depending on your tax bracket.

2. Capital gain (sale more than 2 years after purchase)

• Calculation: The capital gain corresponds to the difference between the sale price and the revalued acquisition price. The acquisition price is revalued by applying the coefficient rates in the official table on form 700.
• Taxation: The gain is taxed at one quarter of your global rate, which reduces the fiscal impact compared to the progressive scale applicable to speculative sales.

Acquisition costs

Acquisition costs mainly include commissions paid to the real estate agent as well as fees related to obtaining the energy certificate.

Allowances

In the case of a capital gain (sale of a property), certain tax allowances may reduce the taxable amount of the capital gain:

• Decennial allowance: Each taxpayer benefits from an allowance of 50.000€ every 10 years. For a married couple or those subject to joint taxation, this allowance is doubled to 100.000€.

• Single allowance: An allowance of 75.000€ may apply when the sold property was acquired by direct-line inheritance and was used as the main residence by the parents of the seller.