Property Capital Gains in Luxembourg 2026: Calculation and Exemptions

When selling property in Luxembourg, the capital gain realized is generally taxable. Understanding this taxation is essential to anticipate the net amount you'll receive and optimize your situation.

What is Property Capital Gain?

Capital gain is the difference between:

• Sale price: The amount received at sale
• Acquisition price: The amount paid at purchase + costs (notary, agency)

To this difference, you can add improvement expenses (works increasing the property's value).

Short-term vs. Long-term Capital Gain

The tax regime depends on the holding period:

Speculation Gain (less than 2 years)

• Capital gain is fully taxed at progressive rate
• Marginal rate can reach 42%
• Added to your other income

Long-term Capital Gain (more than 2 years)

• Overall rate of approximately 21% (half-rate + employment fund contribution)
• €50,000 allowance every 11 years
• Revaluation of acquisition price possible (coefficient)

Exemption Cases

Several situations allow tax exemption:

Primary Residence Exemption

Cumulative conditions:

• The property was your primary residence
• Effective and continuous occupation
• For at least 5 years before sale (or since acquisition if more recent)
• Sale within one year of moving out

Reinvestment of Capital Gain

• Reinvestment in a new primary residence in Luxembourg
• Within 12 months before or after the sale
• Proportional exemption to the amount reinvested

Other Cases

• Sale to direct ascendant or descendant
• Certain land consolidations or exchanges

Calculation Example

Situation: Apartment bought for €400,000 in 2018, sold for €600,000 in 2026

• Gross capital gain: 600,000 - 400,000 = €200,000
• Revaluation coefficient (estimated): +15% = €60,000
• Adjusted capital gain: 200,000 - 60,000 = €140,000
• Allowance: -€50,000
• Taxable capital gain: €90,000
• Tax (approximately 21%): ~€19,000

Optimization Tips

1. Keep all invoices: Works, improvements = less taxable capital gain
2. Sale timing: Wait for 2 years if close to the threshold
3. Plan reinvestment: If buying again, anticipate the exemption
4. Consult an expert: Each situation is unique

Impact on Your Sale Price

Don't integrate tax into your sale price. Set the price according to the market, not your tax obligations. The buyer doesn't pay your tax.