Real estate taxes in Luxembourg

In the Grand Duchy, the responsibility for setting property taxes lies with the municipality where the property is located. Each commune determines its own tax rates and regulations, which means that the tax treatment of properties can vary from one commune to another.

Regarding the types of property subject to taxation in Luxembourg, they include various categories such as residential properties (houses, apartments), commercial properties (office buildings, shops), undeveloped land, agricultural land, and even certain types of movable property in specific cases.

In this article, we will explore the general taxation of real estate in the country. Investment in real estate in Luxembourg is quite popular because of the constantly growing demand, but it implies some limitations and contributions. Let's find out more.

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Taxable property categories

When it comes to taxable property categories, they are divided based on their nature and use. Residential properties are generally assessed differently than commercial properties or agricultural land. Each category has its own criteria for taxation, and the applicable tax rates may also vary.

The 2 main taxable property categories are:

category A for agricultural and forestry properties

category B for all other properties.

Mostly, the real estate owners in Luxembourg are falling into the second category. Depending on the commune, category B, therefore, includes 6 classes of property:

commercial buildings;

mixed-use buildings (commercial & residential);

buildings for other purposes;

houses and apartment buildings;

properties not built on except residential building plots;

residential building plots.

What property is not taxable

In an effort to promote public welfare and facilitate essential services, the government has defined certain categories of property that are exempt from taxation. These exemptions cover a range of valuable assets, including

state and municipal property used for public services,

buildings owned by charitable organizations,

medical facilities operated by hospitals and religious orders.

Interesting fact. In addition, infrastructure assets such as engineering works, railway lines and roads, as well as administrative property belonging to the CFL, have been designated as eligible for tax relief.

How to calculate your real estate taxes

In Luxembourg, the calculation of property tax involves several factors. The specific method may vary depending on the type of property and the commune where it is located.

Cadastral income is an estimate of the rental value of a property determined by the land registry. It represents the annual income that the property is deemed to generate. The cadastral income is adjusted periodically to reflect changes in the rental market.

Communal tax rates are applied based on where and which property is located: the rates are usually published on the websites of the commune (for example, Luxembourg City), or in official governmental sources. Unfortunately, most of them are in French, so it is recommended to contact the commune directly or get in touch with professional tax consultants for more clear information.

To calculate the property tax, the cadastral income is multiplied by the tax rate set by the commune. The resulting amount represents the annual property tax liability. It's important to note that each commune has the authority to set its own tax rates, so the rates can vary between different areas of Luxembourg.

There may be variations and additional factors involved in the property tax calculation for specific types of properties or situations. For instance, certain exemptions or deductions might be applicable, such as exemptions for first-time homebuyers or deductions for energy-efficient renovations. These factors can influence the final amount of property tax payable.

Also, currently, there is a new reform underway, that must come live in 2026. It will change the model of land evaluation and ease the process somehow. A special simulation, that concerns Luxembourg citizens, is already available for this new model. If you want some forecasts, you can check out the calculator.

When to pay real estate taxes

The payment frequency for taxes depends on the tax amount owed.

If the tax is below 55 euros, the full annual amount must be paid by November 15.

For sums ranging from 55 to 110 euros, two payment dates are applicable — May 15 and November 15, with each payment being half of the total annual amount.

If the tax exceeds 110 euros, there are four payment dates — February 15, May 15, August 15, and November 15, with each payment being a quarter of the annual amount.

Property transfer tax in Luxembourg

Property transfer tax, also known as stamp duty, is a tax imposed when ownership of a property is transferred from one party to another. The purpose of this tax is to generate revenue for the government and cover administrative costs associated with property transactions, such as the registration of ownership changes.

There are two factors, that matter in the case of property transfer taxation.

🏡 Residency status

In Luxembourg selling the main residence is exempt from taxation but still must be declared to the government. To qualify as a taxpayer's main residence, the property must meet certain criteria.

First, the taxpayer must either reside in the property at the time of the sale or exchange or complete the exchange not long after moving to another residence. Second, one of the following conditions must be met:

the taxpayer must have lived in the property since its acquisition or completion;

the taxpayer must have lived in the property for at least 5 years before the sale;

the sale or exchange is due to family or professional reasons involving the taxpayer, their spouse or partner.

📄 Period of ownership

For properties held for less than two years, any income from their sale is classified as "speculation income". This income is taxed at ordinary progressive rates based on the taxpayer's income bracket. On the other hand, if the property has been held for more than two years, the income from its sale is called "capital gain". This type of income is taxed at a maximum rate of 21%, which is half of the global rate.

In certain cases, when an individual transfers his or her property to the State, a municipality, or an association of municipalities, the length of ownership becomes irrelevant. This transfer is covered by the Housing Pact and is exempt from income tax.

When calculating transfer tax, it typically involves applying a percentage to the property's value. The real estate transfer tax in Luxembourg is 7% of the value.

Luxembourg property income taxation

Property income tax is mostly relevant to property investors and landlords in Luxembourg. It is a tax on the income generated from owning and renting out properties. Taxable income from property includes

rental income, which is the amount received from tenants, and

capital gains from the sale of a property, which refers to the profits made from selling a property at a higher price than its purchase price.

The applicable tax rates for property income in Luxembourg depend on various factors, including the type of property and the taxpayer's overall income. But as a rule, the property income is taxed at a usual progressive rate.

Deductions or allowances may be available to offset certain property ownership and management expenses, such as property maintenance costs or mortgage interest payments. These deductions can reduce the taxable income and, ultimately, the tax liability.

How to file property income taxes for residents

Property income tax in Luxembourg has reporting requirements and deadlines. Taxpayers need to declare their property income and file the appropriate tax forms within the specified timeframe, which can vary based on individual circumstances.

When the rented property is solely owned by the residenttaxpayer or jointly owned with a spouse/partner or a minor child, the taxpayer is required to fill out Form 190, specifically designed for reporting income from the rental of built properties.

If resident taxpayers co-own a rental property, they must complete two forms to declare their rental income. The first form is Form 210, which deals specifically with rental income from co-owned buildings. This form allows taxpayers to provide detailed information about their rental income and expenses in relation to the co-owned property.

In addition, they must also complete Form 200, known as the Declaration for Joint Reporting of Income from Joint Business Enterprises and Co-owned Properties. This form allows taxpayers to jointly report their income from the co-owned property and any other joint business ventures they may have.

How to file property income taxes for non-residents

Non-resident property owners or investors may have additional considerations to take into account. A non-resident taxpayer who owns a rental property in Luxembourg is generally required to declare the rental income (which is not exempt) on the income tax return form.

However, if a non-resident taxpayer owns a rental property abroad and opts to be treated as a resident taxpayer when filing his income tax return, he must declare the rental income (which is exempt) from the foreign property.

There are no further differences between residents and non-residents:

If the property is solely owned or owned jointly with a close family member — fill out Form 190.

If the property which generates income is co-owned — fill out Forms 200 and 210.