Capital Gains Tax Luxembourg 2026: What Sellers Can Deduct

When you sell a property in Luxembourg, the first question about capital gains tax is not “how much?” but “is anything taxable at all?” — and if it is, which costs reduce the gain. The answer depends on three things: whether the home was your main residence, how long you owned it, and which costs you can prove.

This guide walks through the 2026 rules for a private seller, step by step, using only official sources: the income tax law (LIR) as published by the tax administration (ACD), the ACD’s pages and form 700, and guichet.lu. Rules checked November 2026.

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Who This Guide Is For

Private individuals selling a house, an apartment or a plot from their private assets. Property held by a business, a liberal profession or a company, or bought and sold as a trade, follows other rules — speak to a tax adviser.

Step 1: The Main Residence Exemption — Is Your Sale Taxable at All?

The most valuable “deduction” is the exemption. Under article 102bis of the LIR, the sale of your main residence (résidence principale) is exempt from income tax, however long you owned it.

According to the law and the ACD, a home counts as your main residence only if both of the following apply:

• you live in it when you sell, or you sell it by 31 December of the year after you moved out; and
• it has been your usual home ever since you bought or completed it, or for at least the 5 years before the sale, or you sell for family reasons or because of a job-related move (yours, your spouse’s or your partner’s).

Living in the home on the day of the sale is not enough on its own: one of the conditions in the second point must also be met.

If you moved out longer ago, the home still counts only if you lived in it after buying or completing it, own no other home at your disposal, and left for family or job-related reasons. The ACD’s interactive assistant lets you check your case.

Sales by private individuals to the State, a commune, a syndicate of communes or the Fonds du Logement are also exempt, except under a legal pre-emption right. An exempt sale must still be declared (see below).

Step 2: Within 5 Years or After 5 Years?

If the property was not your main residence — a rental apartment, a second home, a plot — the holding period decides the regime:

• Sold within 5 years of acquisition: speculative gain (bénéfice de spéculation, art. 99bis LIR), added to your other income and taxed at the ordinary progressive rates — top marginal rate 42%, before the employment fund contribution. No revaluation, no allowance. Speculative gains are not taxed if your total for the year is below €500.
• Sold more than 5 years after acquisition: capital gain (bénéfice de cession, art. 99ter LIR). The purchase cost is revalued, an allowance applies, and the gain is taxed at half the global rate — at most 21%, before the employment fund contribution.

The ACD takes the date of the notarial deed as the date of sale. Close to the 5-year mark? Check the exact dates with your notary and tax adviser before fixing the deed date.

Context: the temporary 2024–2025 measures have ended: the 2-year threshold (sales from 1 January to 30 June 2025, and from 1 July to 30 September 2025 where the compromis was registered by 30 June 2025), the quarter of the global rate (at most 10.5%) for long-term gains realised from 1 January 2024 to 30 September 2025, and the option to transfer a 2024–2025 gain to a replacement property. None of them applies to a deed signed in 2026, even if the compromis was registered earlier: the threshold is 5 years and the rate is half the global rate. If you are selling a replacement property onto which an earlier gain was transferred, ask your tax adviser — its acquisition price is reduced by that gain.

Step 3: How Capital Gains Tax on Property Is Calculated

Form 700, the ACD’s form for these sales, follows the law: sale price − (acquisition price or cost + costs directly linked to the sale). For a long-term gain, the acquisition price is revalued first.

The sale price

The price agreed in the deed — in full in the year of the sale, even if paid in instalments.

The acquisition price and your purchase costs

The law defines it broadly: all the expenses you bore to bring the property to its current state, detailed in an annex to form 700. In practice, this is generally understood to include the price paid and the costs of buying — the notary’s fees and the registration and transcription duties. The ACD does not publish an item-by-item list, so confirm with your tax adviser which costs you include.

Improvement and renovation works

Guichet.lu lists invoices for improvement or investment expenses (dépenses d’amélioration ou d’investissement) among the documents the ACD can ask for. For a long-term gain, each expense is revalued with the coefficient of its own year. Whether a job is an improvement or ordinary upkeep is a question for your tax adviser.

Selling costs (frais d’obtention)

Costs directly linked to the sale are deducted. Form 700 asks for the estate agent’s fee and whether the buyer or the seller pays it — so commission paid by you as the seller is generally treated as a selling cost. No official text names it explicitly: keep the agency invoice and confirm with your tax adviser. These costs are added after the revaluation: they are not revalued.

The revaluation coefficients (after 5 years only)

Article 102 of the LIR multiplies the acquisition price by a coefficient for the year of each expense. The table set by the budget law of 19 December 2025 applies to sales whose notarial deed is signed in 2026; it differs from the one printed on the 2025 form 700. Some values:

• 2006: 1.44
• 2011: 1.28
• 2016: 1.22
• 2020: 1.15
• 2021: 1.12
• 2022: 1.06
• 2023: 1.02
• 2024 and later: 1.00

The full table, back to 1918, is in article 102 of the coordinated LIR published by the ACD.

Step 4: The Allowance and the Half Global Rate

For a long-term gain, article 130 of the LIR then deducts a ten-year allowance (abattement décennal):

• €50,000 per taxpayer, or €100,000 for spouses taxed jointly (the same applies to partners taxed jointly);
• reduced by any allowance you already used in the previous 10 years;
• it cannot create a loss;
• it is shared with gains on substantial shareholdings, which use the same allowance.

What remains is taxed at half the global rate — half your average tax rate on your total taxable income, gain included. It therefore depends on your other income and tax class; the ACD gives a maximum of 21%. On top, the ACD adds the employment fund contribution (7% of the tax, or 9% above an adjusted taxable income of €150,000, or €300,000 for tax class 2) and, for people covered by Luxembourg dependency insurance, the 1.4% dependency contribution.

Worked Example (Fictional)

Example (fictional, simplified — not a tax calculation for your case): a married couple, taxed jointly, sells in 2026 an apartment bought in 2016 as a second home. They never lived in it, never rented it out, and have used no allowance in the last 10 years.

• 2016 purchase: price €400,000 + purchase costs €30,000 = €430,000
• 2020 renovation (kitchen and bathroom, with invoices): €40,000
• 2026 sale price: €750,000
• Agency commission paid by the sellers: €20,000

Assumptions: the purchase costs count in the acquisition price, the renovation qualifies as an improvement, the agency commission is accepted as a selling cost, and the couple is taxed jointly. Your tax adviser confirms each of these for a real sale.

Calculation with the 2026 coefficients:

• Revalued purchase: €430,000 × 1.22 = €524,600
• Revalued works: €40,000 × 1.15 = €46,000
• + selling costs (not revalued): €20,000
• = acquisition price to consider: €590,600
• Gain: €750,000 − €590,600 = €159,400
• − allowance for a jointly taxed couple: €100,000
• = taxable gain: €59,400

Half the global rate can never exceed 21%, so the tax on this gain is at most €12,474, before the employment fund contribution and any dependency contribution. The real figure is usually lower: it depends on the couple’s total income and tax class, and only the ACD’s assessment gives the final amount.

Without revaluation, the gain would have been €260,000. Revaluation and the allowance make a large difference — but only after 5 years; within 5 years, the gain would have been taxed at the ordinary progressive rate.

If the apartment had been rented out, ask your tax adviser how the depreciation (amortissement) you deducted affects the calculation.

Inherited or Gifted Property

When you sell a property you inherited or received as a gift, the LIR uses the price paid by the last person who bought it, and you are treated as having acquired it on that date — also for the 5-year rule.

For a built property inherited in direct line that was your parents’ (or your spouse’s parents’) last main residence, an extra €75,000 allowance applies to the long-term gain, before the €50,000 / €100,000 allowance, for one such home only. Your notary and tax adviser can check the conditions.

Land, Outbuildings and Large Plots

The main-residence exemption covers the building, its normal outbuildings and the land on which it stands; a grand-ducal regulation of 4 June 1992 defines what is not a normal outbuilding. Under that regulation, land beyond 15 times the building’s footprint, and any part that counts as building land under the commune’s building rules, is not a normal outbuilding; a plot of up to 10 ares is generally covered in full. A plot without your home on it does not qualify. If your plot is large or could partly be built on separately, ask your tax adviser before the deed whether part of the price could be taxable.

What Does Not Reduce Your Tax

• Costs you did not pay: for example, commission paid by the buyer.
• Costs you cannot prove: the ACD warns that without supporting documents it may use a minimum acquisition price — for most homes far below what you actually paid. Keep every document.
• Revaluation or the allowance on a speculative gain: both apply only after 5 years.
• Losses against your salary: a loss on a sale can only be set against other property gains, speculative gains or gains on substantial shareholdings — never against salary or pension, and it cannot be carried forward.

An early mortgage repayment penalty, mortgage interest, routine maintenance, removal costs or an energy certificate are not named in any official list. Do not count on them without your tax adviser’s confirmation.

Documents to Keep

• Your purchase deed, with the price and the date
• The notary’s statement of fees and duties paid on the purchase
• Dated invoices for improvement and renovation works
• The sale deed and the compromis
• The agency invoice and other selling-cost invoices
• For inherited or gifted property: the last purchase deed and the inheritance or gift documents
• Proof that you lived in the home, if you claim the main-residence exemption

How and When to Declare the Sale

• Always declare it: according to guichet.lu, every sale must be declared to the ACD, even when exempt. For a main residence, only the first section of form 700 is filled in.
• Which year: the year of the notarial deed (or, if the transfer itself is subject to a suspensive condition, the year the condition is met).
• How: one form 700 per property, attached to your tax return (form 100), sheet D.
• Deadline: 31 December of the following year — for a sale in 2026, 31 December 2027.
• Non-residents selling a property in Luxembourg must also declare it.

Read more: how to sell a property in Luxembourg, Luxembourg property taxes explained, notary fees and closing costs and how property valuations work.

Frequently Asked Questions

Do I pay capital gains tax on my main residence in Luxembourg?

No, if it qualifies as your main residence under article 102bis of the LIR, however long you owned it. You must still declare the sale to the ACD.

Is living in my home on the day of the sale enough for the exemption?

No. You must also have lived there ever since you bought or completed it, or for at least the 5 years before the sale, or be selling for family or job-related reasons. The ACD’s interactive assistant helps you check your case.

Which costs can I deduct from a capital gain on property?

The purchase price and, subject to your tax adviser’s confirmation, the purchase costs; improvement works; and costs directly linked to the sale, such as the commission you pay as the seller (not commission paid by the buyer). Keep every invoice.

Can I deduct the estate agent’s commission when I sell?

Generally yes, if you pay it as the seller: form 700 asks for the agency fee and who pays it, and costs directly linked to the sale are deducted from the gain (without revaluation). Commission paid by the buyer does not reduce your gain. Keep the invoice and confirm with your tax adviser.

Are renovation works deductible when I sell?

Improvement expenses form part of the acquisition cost and, after 5 years, are revalued with the coefficient of their year. Keep the invoices.

How much is the capital gains allowance in 2026?

€50,000 per taxpayer or €100,000 for spouses taxed jointly, reduced by any allowance used in the previous 10 years — only for sales after 5 years.

What is the capital gains tax rate on property in Luxembourg?

Within 5 years: the ordinary progressive rate (top marginal rate 42%). After 5 years: half the global rate, at most 21%. The employment fund contribution comes on top.

This article is general information, not legal or tax advice. Rules checked November 2026. Every sale is different: ask a tax adviser or the ACD about your own case, and your notary about the deed; the official texts prevail.

Sources: guichet.lu — reporting the sale or exchange of real estate, income tax return; ACD — vente d’un immeuble, vente de la résidence principale, demi-taux global, form 700 (tax year 2025), LIR, coordinated text in force on 1 January 2026 (art. 99bis, 99ter, 102, 102bis, 102ter, 130, 131); Legilux — law of 22 May 2024, law of 4 April 2025, law of 27 June 2025, budget law of 19 December 2025 (2026 coefficients), grand-ducal regulation of 4 June 1992.