To start with, let’s look at what exactly is involved?
Taxation at ¼ of the overall rate: you pay half the usual capital gains tax.
Normally, capital gains on property are taxed at half your normal rate. I invite you to read our full, detailed article on the taxation of property gains, but to sum up, this means that you could be taxed at up to 21%.
The tax measure that has just been extended until 30.6.2025 reduces this taxation from ½ of the overall rate to ¼. So instead of paying up to 21% on the capital gain, you will pay a maximum of 10.25%. That’s a tax saving of 50%.
On top of that, the buyer pays only half the registration fees. This can have an indirect impact on you too, because by making it easier for the buyer to buy, it also makes it easier for you to sell.
The right questions to ask yourself.
To help you make an informed decision, here are the most important questions to ask yourself.
How long have you owned the property? If it’s an inherited property, how long has it been owned by the family?
The longer you own the property, the greater the capital gain and the more tax you can save. For example, if you bought the property in 2019, much of the increase in value from 2019 to 2021 has probably been swiped out by the fall in prices from 2022 to 2024. Conversely, if you have owned the property for 10, 20 or 30 years, the capital gain (and therefore the tax gain) will be greater and greater.
How much depreciation do you benefit from?
If you are still benefiting from 6% depreciation on an investment purchase for a few years, this also means that the property is fairly new (and therefore not likely to generate much capital gain). So it may not be worth selling, as the tax gain may not be significant enough, especially as you would loose the tax benefi linked to the depreciation.
How old is the property and, more importantly, what is its energy performance rating?
A 2023 directive from the European Parliament, which has not yet been transposed in Luxembourg, sets targets for optimising the energy performance of residential buildings, which implies renovation costs and potentially difficult discussions between co-owners.
What’s more, we’ve noticed since this year that banks are becoming more restrictive in their financing of houses and flats with poor energy performance records, which is having a negative impact on selling prices.
Since the beginning of 2024, we have therefore been advising people, not to wait too long to sell houses and flats with poor energy performance certificates.
The current tax measures, which have been extended until 30.6.2025, add a further strong argument to this recommendation, because not only are you ‘getting rid’ of a difficult property in good time, but you are also benefiting from very favourable taxation.
What if you own several properties?
In this case, we advise you to think about selling the oldest properties (bad energy passports) and those you have held the longest (higher capital gains = higher tax savings), while keeping the newer ones.
What’s more, there’s nothing to stop you buying a newer property with the proceeds of the sale, as there will certainly still be bargains to be had in 2025.
The right time to sell?
It’s impossible to predict how property prices will develop. Will the perceived containment of inflation cause interest rates to fall further and property prices to rise? Or, on the other hand, will US tariffs boost inflation, pushing up interest rates and pushing down property prices? What impact will the political and economic crises in our neighbouring countries have on the economy and real estate in Luxembourg?
The only thing we know for sure today is that we now have 6 months’ visibility on the tax advantages linked to property sales, and that if you want to take advantage of them, it’s better to act as quickly as possible than to wait.
Now is the time to make up your mind!
Why is this?
The measures have been extended until 30.6.2025, and both the Prime Minister, Luc Frieden, and the Minister for Housing, Claude Meisch, have insisted that there will be no further extensions. So the deadline is 30.6.2025 at the latest.
Bearing in mind that it generally takes 2 months to obtain the buyer’s bank approval and 3 to 4 weeks for the appointment with the notaire, you need to sign the preliminary sales agreement by the end of March at the latest.
As the market remains fairly difficult and slow (depending of course on the property itself, its location and the price), it’s best to get the sale under way as quickly as possible.
Why should you contact Homexperts?
With its exclusive system in Luxembourg, Homexperts.lu is the ideal partner for determining the right price, ensuring the use of serious estate agents and guaranteeing you neutral monitoring throughout the sale.
If you would like to launch the sale or discuss the matter in more detail so that you can make your decision, don’t hesitate to write to us or call Marc Neuen directly on 585 506.
