Reporting the sale or exchange of real estate
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A taxpayer who sells or exchanges privately owned real estate (house, apartment or development land) is subject to tax obligations.
Income from the sale or exchange of real estate is subject to different tax treatments depending on whether the property:
- has been held by the taxpayer for more than 2 years;
- has been held by the taxpayer for less than 2 years;
- is the main residence or not. The sale or exchange of the main residence is exempt from income tax, regardless of the length of time the property is held;
- is transferred by a natural person to the State, a commune or an association of communes, regardless of the period of detention of the building (Housing Pact).
Nevertheless, the exchange or sale of a building still has to be reported to the Luxembourg Inland Revenue (Administration des contributions directes - ACD).
Who is concerned?
The taxpayer who sells or exchanges real estate must declare it to the ACD if he is:
- resident and sells a property located in Luxembourg or abroad;
- non-resident and sells a property located in Luxembourg;
- a non-resident and have opted to be considered a resident taxpayer and sell a property located in Luxembourg or abroad.
The declaration of the income collected is done by the submission of a tax return (form 100) and of the relevant annex (form 700).
How to proceed
Determination of the main residence
The sale or exchange of the main residence is exempt from income tax. However, the sale or exchange made must always be declared.
The main residence includes the outbuildings and grounds that form the building's structure.
The taxpayer's residence is considered to be the main residence when the dwelling is either occupied by the taxpayer at the time of the sale or exchange, or the sale or exchange is made no later than December 31 of the year following the move. In addition, one of the following conditions must be met:
- the taxpayer has occupied it following its acquisition or completion; or
- the taxpayer has occupied it for at least the 5 years preceding the sale or exchange; or
- the sale or exchange was made for family reasons or is related to the profession of the taxpayer, his spouse, or partner.
The taxpayer's residence is considered to be the main residence when the dwelling is either occupied by the taxpayer at the time of the sale or exchange, or the sale or exchange is made no later than December 31 of the year following the move. Moreover, the following 3 conditions must be met:
- the taxpayer has occupied it following its acquisition or completion; and
- the taxpayer does not own another residence (buildings that the owner has at his immediate disposal); and
- the abandonment of the home was motivated for family reasons or is related to the profession of the taxpayer, his spouse or his partner.
The Luxembourg Inland Revenue provides an interactive online assistant for determining if a sold residence can be considered a primary residence.
Tax treatment of income from sale
There are several types of tax treatment of income from the sale or exchange of a building (residence):
- when the sale or exchange of the real estate concerns the main residence or the Housing Pact, the income is exempt from income tax;
- when the sale or exchange of real estate takes place less than 2 years after its acquisition, the income earned is called speculation profit and is taxed at ordinary progressive rates. Depending on the level of the taxpayer's annual taxable income and their family situation, the marginal tax rate is set at a maximum of 42 %;
- when the sale or exchange of the immovable takes place more than 2 years after its acquisition, the income earned is called a capital gain on the sale. If income is earned between July 1, 2016 and December 31, 2018, the maximum extraordinary tax rate will be 10.5% (quarter of the overall rate). Income that has not been earned during this period is taxed at a maximum of 21% (half of the global rate).
The income obtained following the capital gain on sale benefits from a ten-year reduction of EUR 50,000 (EUR 100,000 if the husbands or partners are taxed collectively). The amount of the abatement is reduced by the amount of allowances that the taxpayer has already received during the 10 years in which he had the dwelling in his possession.
Income from the sale or exchange of real estate is in principle also subject to solidarity tax and long-term care insurance. The contribution due is calculated by the Luxembourg Inland Revenue.
The loss from the sale or exchange of a building may be offset:
- by gains from disposal/sale of another property;
- by a speculative gain; or
- by gains from from the disposal of a significant stake.
However, the excess loss may not be offset by other categories of income (for example, income from paid employment), or carried over to future years.
If the building is located abroad, the speculation gains generated are, as a rule, exempted, that is to say only taken into account to determine the rate. Extraordinary exempt capital gains are to be neglected when calculating the overall tax rate.
Declaration of sale or exchange of a property held by a taxpayer
The sale or exchange of the building must be declared the taxation year in which it was sold or exchanged.
The date chosen is the date of the notarial deed, regardless of the date of payment by the purchaser.
When the transfer is affected by a suspensive condition, the change of ownership becomes final at the end of the contingency period, that is, the year in which the suspensive condition is fulfilled.
Form 700
A taxpayer who has sold or exchanged a building from their private assets may complete Form 700 and attach it to their income tax return (Form 100). If he sells or exchanges several buildings, he can fill as many 700 forms as there were buildings sold or exchanged.
Form 100
The income declared in form 700 is to be reported on sheet D (page 11) of form 100.
The different incomes can be reported as non-exempt income or as exempt income. Non-exempt income taxable in Luxembourg is income related to the sale or exchange of real estate located in Luxembourg. Exempt income relates to the sale of properties located abroad.
Supporting documents
Upon request from the tax office, the taxpayer must provide the necessary supporting documents (copy of the deed of sale of the property, invoices proving improvement or investment expenses, etc.).
Luxembourg Inland Revenue reserves the right to request additional supporting documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its offices.
Online services and forms
Who to contact
Luxembourg Inland Revenue
-
Luxembourg Inland Revenue
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
Please click on the link above to find the competent department.
Related procedures and links
Procedures
Links
Further information
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Pacte logement
sur le site de l'Administration des contributions directes (ACD)
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Vente de la résidence principale
sur le site de l'Administration des contributions directes (ACD)
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Assistant interactif permettant de déterminer si une résidence cédée est la résidence principale
sur le site de l'Administration des contributions directes (ACD)
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Assurance dépendance
sur le site de l’Administration des contributions directes (ACD)
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Mémento fiscal - Résumé des impôts directs perçus
sur le site de l'Administration des contributions directes (ACD)
Legal references
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Loi modifiée du 4 décembre 1967
concernant l'impôt sur le revenu
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Règlement grand-ducal du 4 juin 1992
portant exécution de l'article 102bis, alinéa 5 de la loi du 4 décembre 1967 concernant l'impôt sur le revenu (dépendances non normales de la résidence principale)
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Règlement grand-ducal modifié du 16 juin 1992
concernant l'impôt sur le revenu
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Circulaire L.I.R. n° 99ter/3 du 16 février 2009
Loi du 22 octobre 2008 portant promotion de l’habitat et création d’un pacte logement avec les communes : mesures fiscales ayant un impact sur l’impôt sur le revenu
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