Acquisition of an existing property

• 6% registration fee + 1% transcription fee
• Only applicable to the land portion of a new property (off-plan or VEFA)
• However, a tax credit of €20,000 per person (€40,000 in the case of a joint declaration) is deductible from the registration fees (provision known as the “Bëllegen Akt”).
• If the tax credit available exceeds the registration fees normally applicable, a minimum of €100 in registration fees remains payable
• If the tax credit is not fully used on the first purchase of a property, it can be used on a second purchase.
• If the property purchased is let or sold within 2 years, the tax advantage resulting from the application of the tax credit must be repaid.

Mortgage

• 0.24% fee + 0.05% registration fee (calculated on the amount of the loan)

Acquisition of an existing property

• 6% registration fee + 1% transcription fee
• Only applicable to the land portion of a new property (off-plan or VEFA)
• Possibility of declaring the acquisition with a view to resale and opting for this specific scheme:
• Advance payment of 7.2% registration fee (instead of 6%) + 1% transcription fee (unchanged)
  6% registration fee refunded if resold within 2 years (resulting in a net registration fee of 2.2%)
  4.8% registration fee refunded on resale between 2nd and 4th year (resulting in a net registration fee of 3.4%)

Mortgage

• 0.24% fee + 0.05% registration fee (calculated on the amount of the loan)

Exemption for zero-rate (or reduced-rate) mortgage loans granted by employers / interest subsidies granted by employers

• Loans granted by the employer at an interest rate of less than 1.5% (rate applicable from 2015) generate a taxable benefit in kind, which corresponds to the difference between the 1.5% rate and the reduced interest rate.
• The interest subsidy applies when the employer provides financial support for the employee’s mortgage with a third-party bank. Generally, the interest subsidy is deducted from the employee’s annual bonus.
• The above benefits are tax-free up to €3,000 per person (€6,000 if declared jointly or single with dependent child(ren)).

Deductible mortgage interest

Interest paid on a mortgage loan (excluding the potential interest subsidy) is deductible subject to the following limits:

• 2,000 per person in the household (including dependent children) for the first 6 years
• 1,500 per person in the household (including dependent children) for the next 5 years
• 1,000 per person in the household (including dependent children) for the following years

Deductible mortgage insurance: Single premium

• Deductible basis: €6,000 per taxpayer + €1,200 per child
• Increase in deductible base of 8% per year for taxpayers over 30 (with a maximum increase of 160% in the deductible base)

Deductible mortgage insurance: Annual premium

• Collectively deductible with other insurance premiums (e.g. life, death, incapacity, accident, sickness, civil liability) and interest other than mortgage interest up to €672 per person in the household (including dependent children).

Net rental income

• Net rental income is equal to gross rental income less deductible expenses – Gross rental income is equal to the rent paid by the tenant
• Deductible expenses are those borne by the owner and include :

1. Interest and charges relating to the financing of the property (including mortgage registration fees and notary fees)
2. Rental management costs
3. Property tax
4. Local authority charges
5. Maintenance and repairs
6. Insurance premiums
7. Depreciation of the property

• Rental investments are depreciated using the straight-line method. The depreciable purchase price excludes the value of the land and includes registration duty, notary fees and any other charges relating to the acquisition of the property (if there is no division in the deed of sale, the value of the land is considered to represent 20% of the purchase price).
• Depreciation rates are based on the year of completion of the asset, as follows

1. 6% per annum for the first 6 years
2. 2% for the next 54 years
3. 3% after 60 years

• Where the net rental income is negative, it is deductible from the taxpayer’s other taxable income (such as earned income).

• Calculated on the basis of the unit value of a property as determined by the Luxembourg tax authorities
• The rate of property tax varies from one commune to another
• Property tax is generally minimal (e.g. +/- €150 for a €500,000 flat in

• Calculated on the basis of the unit value of a property as determined by the Luxembourg tax authorities
• Property tax rates vary from one commune to another – Property tax is generally minimal (e.g. +/- €150 for a €500,000 flat in

• Tax exemption
• For clarification purposes, the capital gains tax exemption applies when:

a) The taxpayer occupies the property when the sale takes place and the property has been their principal residence since acquisition or completion; or

b) The taxpayer occupies the property when the sale takes place and the property has been the taxpayer’s principal residence for 5 years prior to the sale (e.g. if the taxpayer has rented out the property prior to using it as their principal residence); or

c) The taxpayer occupies the dwelling when the sale takes place, the dwelling constitutes his principal residence and the dwelling is sold for family reasons (marriage, divorce, birth, etc.) or professional reasons (change of residence) (e.g. if the taxpayer rented the dwelling before using it as his principal residence, but the taxpayer is obliged to move for professional reasons); or

d) In the case of a., b. and c. above where the sale takes place in the year following the occupier’s move to a new principal residence; or

e) The taxpayer does not occupy the dwelling when the sale takes place, does not own/occupy another dwelling and has moved out of the dwelling for family reasons (marriage, divorce, birth, etc.) or for professional reasons (change of residence) (e.g. if the taxpayer has moved out of the dwelling he has owned for more than a year to rent a larger dwelling following the birth of twins).

Speculative profit (short-term)

• Applicable when the property is sold up to 2 years after acquisition
• Corresponds to the difference between the sale price (excluding agency fees or energy passport fees) and the purchase price (including registration duty, notary fees and any other charges on the purchase price)
• Taxed at the marginal rate (i.e. maximum 45.78%) with no applicable deductions

Capital gains tax (long-term)

• Applicable where the property is sold more than 2 years after acquisition
• Corresponds to the difference between the sale price (excluding agency fees or energy passport fees) and the revalued purchase price (including registration duty, solicitors’ fees and any other charges on the purchase price of the property).
• The revaluation coefficient is determined by the tax authorities and depends on the length of time the property has been held.
• A flat-rate allowance of €50,000 per taxpayer, or €100,000 in the case of a joint declaration, applies every 10 years.
• If the flat-rate allowance is not used up within a 10-year period, it can be used against a subsequent long-term gain
• Taxed at half the overall income tax rate (i.e. a maximum of 22.89%)