This article will help you determine whether you have to pay tax when you sell your property in Luxembourg.
The matter is fairly complex, and there are only 2 easy cases:
- You never pay tax if you occupied the property immediately after buying it and it is still your official residence when you sell it,
- You will almost always pay tax if the property sold was never your principal residence, e.g. if it was inherited or has always been let.
The devil is in the detail. Here are the most common cases where you don’t have to pay capital gains tax:
- You moved into the property as soon as you bought it and it is still your main residence when you sell it. In this case, the length of occupancy is irrelevant.
- You did not move into the property when you bought it, but you lived there for at least the last 5 years before selling during which it was your official residence,
- The property was still your principal residence in the year prior to the sale and you moved into it immediately after acquisition and it was not subsequently let.
As there are many other scenarios, the Tax Administration has provided an online simulator here to help you determine whether you will have to pay tax. This handy little tool will guide you through the questions you need to answer to determine whether or not the capital gain will be taxed.
Here are a few more frequently asked questions about taxation on property sales.
Do I have to pay capital gains tax if I reinvest the money within 12 months?
YES, you do. What you decide to do with the proceeds of the sale has no bearing on taxation.
Am I taxed on the sale of an inherited property?
YES. Under Luxembourg law, you do not pay inheritance tax in a direct line. But when you sell any inherited property you always pay capital gains tax (unless, of course, the inherited property was also your principal residence).
Is the capital gain the difference between the sale price and the inheritance valuation?
No. In the event of the sale of an inherited property, the acquisition value taken into account is the value when the property entered the family estate, e.g. when the parents bought it. This initial acquisition price is revalued using a coefficient defined annually by the Tax Administration, which you can consult here.
How is capital gains calculated on the sale of a property?
We invite you to read our article on capital gains tax, to understand how capital gains are calculated, what costs you can deduct and what allowances you are entitled to.
Do you still have questions on this subject or can we help you in any way to sell your property in Luxembourg? Then don’t hesitate to write to us or call us on 585 506.
