The information on this page applies to:

• each Luxembourg resident who owns and rents out residential property in Luxembourg or abroad;
• each non-resident who owns and rents out residential property in Luxembourg;
• any non-resident who owns and rents out residential property abroad and who opts to be treated as a resident taxpayer for income tax return purposes.

In all of the above scenarios, the taxpayer must file an income tax return.

General principles of taxation

The income of resident taxpayers from the rental of property located in Luxembourg is taxed at ordinary progressive rates. Depending on taxpayers' annual taxable income and their family status, the maximum marginal tax rate (including the solidarity tax) is either 42.80 % or 43.60 %.

Income from property rental is generally subject to long-term care insurance at a rate of 1.4 %. The contribution due in that regard is calculated by Luxembourg Inland Revenue.

The income of non-resident taxpayers (with the exception of income from paid employment, or from a pension or annuity) is taxed at a minimum rate which varies depending on their level of income, unless said taxpayers have opted to be treated as resident taxpayers.

Therefore, the procedures to be followed depend on whether the taxpayer is a resident or a non-resident and on whether the rented property belongs:

• to the taxpayer alone and/or together with a jointly taxed spouse/partner or with a minor child;
• to 2 or more taxpayers who are not taxed jointly.

Resident owning real property alone or together with a spouse/partner

Resident taxpayers who own rental properties, whether in Luxembourg or abroad, must report the rental income on their income tax returns.

If the rental property belongs to the taxpayer alone and/or together with a jointly taxed spouse/partner or with a minor child, the taxpayer must complete Form 190 (Income from rental of built properties).

The shaded portions of the form must be completed only if the taxpayer lives in a portion of the property being rented out.

If more than one property is rented out by the same taxpayer, a separate Form 190 must be completed for each property.

Completing Form 190

General information

General information about the rental property (address, etc.) must be entered in rows 1 to 5.

Receipts

Gross rental payments for the year (rows 8 to 11) and for previous years (row 13) as well as gross rental payments from the rental of garages (row 14) must be reported on the form.

Business (income acquisition) expenses (deductible expenses)

Income acquisition expenses relating to rental income include the following:

• maintenance and repair costs;
• income-acquisition expenses that are not reimbursed by the tenant;
• amortisation expenses;
• interest payments, allowance payments, and ongoing charges;
• other deductible expenses.

Maintenance and repair costs

These are ordinary maintenance and repair costs incurred by the owner, including repainting, roof and heating repairs, plumbing repairs, etc.

On the other hand, investment-related expenses are not tax-deductible as expenses for the acquisition of income. Investment-related expenses are expenses that are incurred for the purpose of changing the nature of the building (such as the division of a dwelling into smaller dwelling units, or the conversion of a dwelling into commercial premises) or improving it (by installing a central heating system or a lift, for example) or extending it (such as by adding a room or finishing the attic). These expenses are to be amortised by applying the amortisation rates provided for this purpose (see below).

For the sake of simplicity, the Luxembourg Inland Revenue considers that renovation costs of up to 20 % of the purchase price (excluding land) do not constitute a major improvement of the property, and therefore deems them maintenance and repair costs.

At the taxpayer's request, significant maintenance and repair costs may be spread over a period of 2 to 5 years. Such costs are deemed significant if their amount exceeds one-half of annual rent. In that case, the taxpayer must provide the information requested in rows 30-31 and 50-51 of the form.

Expenses for the acquisition of income not reimbursed by the tenant

Taxpayers may deduct expenses relating to the rental property, including electricity, heating, water, fire insurance premiums, etc. Such expenses are deductible if they have not been reimbursed by the tenant. These expenses are to be entered in rows 32-34 of the form.

Depreciation

The amortisation rate applied to the purchase price (excluding land), plus the notarial deed fees and investment-related expenses, is as follows:

• 6 % where the rental property has been subject to an energy renovation that was completed less than 9 years ago;
• 4 % for buildings that were completed less than 5 years ago;
• 2 % for buildings that were completed 5 or more years ago.

If the price of the land is not known, it may be assessed at 20 % of the total price of the land and the building, including deed fees.

The taxpayer must enter the amortisation rate, the value to be amortised, and the amount of the amortisation payment in rows 36-37.

Flat-rate deductions for certain income-acquisition expenses

Rather than itemising maintenance and repair costs, income-acquisition expenses not reimbursed by the tenant, and amortisation expenses, taxpayers may opt for the flat-rate deduction for such expenses.

The flat-rate deduction is only permitted for properties that the taxpayer owns privately and that were completed at least 15 years prior to 1 January of the tax year in question.

The flat-rate deduction of the above-mentioned income-acquisition expenses is set at 35 % of gross rental income, up to a maximum of EUR 2,700 per year and per property. To request the flat-rate deduction, check the "yes" box in row 41.

It should be noted that the income-acquisition expenses discussed below are deductible in addition to the flat-rate deduction.

Interest payments

Interest payments on debt incurred in order to finance the rental property are deductible without limit and must be reported in row 42.

Other deductible expenses

Ongoing allowance payments (row 43), management fees (row 44), property tax, water fees, and rubbish-collection fees (row 45) paid by the owner and not reimbursed by the tenant are also deductible as income-acquisition expenses.

Details about loans, interest payments, allowance payments, and ongoing charges should be entered in rows 54-55.

Net rental income (row 24 of Form 190)

Total gross rental income is calculated in row 22 of the form.

Total income-acquisition expenses relating to the rental property are calculated in row 48 and entered in row 23 of the form.

The amount stated in row 24 of Form 190 corresponds to net income from property rentals (gross rental payments less income-acquisition expenses).

Reporting of net income on the income tax return

The amount of net income as determined above must be reported in the taxpayer's income tax return under 'Revenu net provenant de la location de biens' (net income from rental of property).

If the taxpayer owns more than one property, the amount to be reported on the income tax return form is the total net income from the rental of those properties.

Supporting documents

Taxpayers are required to attach a certificate showing their interest payments on the debt incurred to finance the rental property to their income tax return and its annex (Form 190). Upon the tax office's request, the taxpayer must provide the necessary supporting documentation (copies of the deed of purchase for the property, receipts for income-acquisition expenses incurred, etc.).

Resident co-owner of a property

Co-ownership refers to ownership of real property by joint owners (such as undivided ownership of property).

Resident taxpayers who own rental properties, whether in Luxembourg or abroad, must report the rental income on their income tax returns.

If the rental property is co-owned, resident taxpayers must complete Form 210 (Rental income from co-owned built properties) and Form 200 (Declaration for joint reporting of income from joint business enterprises and co-owned properties)

The shaded portions of Form 210 must be completed only if the taxpayer lives in a portion of the property being rented out.

If more than one property is co-owned and rented out, the taxpayer must complete one Form 210 for each property.

Completing Form 210

General information

General information about the rental property (address, etc.) must be entered in rows 1 to 5.

Receipts

Gross rental payments for the year (rows 8 to 11) and for previous years (row 13) as well as gross rental payments from the rental of garages (row 14) must be reported on the form.

Business (income acquisition) expenses (deductible expenses)

Income acquisition expenses relating to rental income include the following:

• maintenance and repair costs;
• income-acquisition expenses that are not reimbursed by the tenant;
• amortisation expenses;
• interest payments, allowance payments, and ongoing charges;
• other deductible expenses.

Maintenance and repair costs

These are ordinary maintenance and repair costs incurred by the owner, including repainting, roof and heating repairs, plumbing repairs, etc.

On the other hand, investment-related expenses are not tax-deductible as expenses for the acquisition of income. Investment expenses refers to:

• expenses for the purpose of changing the nature of the property (for example, sub-dividing a dwelling into several smaller dwellings, or converting a residential property into a commercial property);
• expenses for the purpose of improving the property (for example, by installing central heating or a lift);
• expenses for the purpose of expanding the property (for example, adding a room or finishing an attic).

These expenses are to be amortised by applying the amortisation rates provided for this purpose (see below).

For the sake of simplicity, the Luxembourg Inland Revenue considers that renovation costs of up to 20 % of the purchase price (excluding land) do not constitute a major improvement of the property, and therefore deems them maintenance and repair costs.

At the taxpayer's request, significant maintenance and repair costs may be spread over a period of 2 to 5 years. Such costs are deemed significant if their amount exceeds one-half of annual rent. In that case, the taxpayer must provide the information requested in rows 39-40 and 58-60 of the form.

Expenses for the acquisition of income not reimbursed by the tenant

Taxpayers may deduct expenses relating to the rental property, including electricity, heating, water, fire insurance premiums, etc. Such expenses are deductible if they have not been reimbursed by the tenant. These expenses are to be reported in rows 42-44 of the form.

Depreciation

The amortisation rate applied to the purchase price (excluding land), plus the notarial deed fees and investment-related expenses, is as follows:

• 6 % where the rental property has been subject to an energy renovation that was completed less than 9 years ago;
• 4 % for buildings that were completed less than 5 years ago;
• 2 % for buildings that were completed 5 or more years ago.

If the price of the land is not known, it may be assessed at 20 % of the total price of the land and the building, including deed fees.

The taxpayer must include the amortisation rate, the value to be amortised, and the amount of the amortisation payment in rows 47-48.

Flat-rate deductions for certain income-acquisition expenses

Rather than itemising maintenance and repair costs, income-acquisition expenses not reimbursed by the tenant, and amortisation expenses, taxpayers may opt for the flat-rate deduction for such expenses.

The flat-rate deduction is only permitted for properties that the taxpayer owns privately and that were completed at least 15 years prior to 1 January of the tax year in question.

The flat-rate deduction of the above-mentioned income-acquisition expenses is set at 35 % of gross rental income, up to a maximum of EUR 2,700 per year and per property. To request the flat-rate deduction, check the "yes" box in row 51.

It should be noted that the income-acquisition expenses discussed below are deductible in addition to the flat-rate deduction.

Interest payments

Interest payments on debt incurred in order to finance a rental property are deductible without limit and must be reported in row 52.

Other deductible expenses

Ongoing allowance payments (row 53), management fees (row 54), property tax, water fees, and rubbish-collection fees (row 55) paid by the owner and not reimbursed by the tenant are also deductible as income-acquisition expenses.

Details about loans, interest payments, allowance payments, and ongoing charges should be entered in rows 63-64.

Net common rental income (row 68 of Form 210)

Total gross rental income is calculated in row 22 and reported in row 66 of the form.

Total income-acquisition expenses relating to the rental property are calculated in row 56 and entered in row 67 of the form.

The amount stated in row 68 of Form 210 corresponds to net income from property rentals (gross rental payments less income-acquisition expenses).

Completing Form 200

The amount of net common income as determined in row 68 must be reported on page 2 of Form 200, Column 5, in accordance with the percentage held by each co-owner of the property.

Page 2 of Form 200 must be completed, indicating the surname, first name, address (Column 1), as well as the taxpayer number and tax office for each taxpayer (Column 2).

Completing the income tax return

The amount of net income (the taxpayer's proportional share) must be reported in the taxpayer's income tax return under 'Revenu net provenant de la location de biens' (net income from rental of property).

If the taxpayer owns more than one property, the amount to be reported on the income tax return form is the total net income from the rental of those properties.

Supporting documents

Taxpayers are required to attach a certificate showing their interest payments on the debt incurred to finance the rental property to their income tax return and its annexes (Forms 210 and 200). Upon the tax office's request, the taxpayer must provide the necessary supporting documentation (copies of the deed of purchase for the property, receipts for income-acquisition expenses incurred, etc.).

Non-resident owning real property alone or together with a spouse/partner

Where a non-resident taxpayer owns a rental property in Luxembourg, the taxpayer must generally report the (non-exempt) rental income on the income tax return form.

Where a non-resident taxpayer owns a rental property abroad, the taxpayer must report the (exempt) rental income if they opt to be treated as a resident taxpayer when filing their income tax return.

If the rental property belongs to the taxpayer alone and/or together with a jointly taxed spouse/partner or with a minor child, the taxpayer must complete Form 190 (Income from rental of built properties).

The shaded portions of the form must be completed only if the taxpayer lives in a portion of the property being rented out.

If more than one property is rented out by the same taxpayer, a separate Form 190 must be completed for each property.

Completing Form 190

General information

General information about the rental property (address, etc.) must be entered in rows 1 to 5.

Receipts

Gross rental payments for the year (rows 8 to 11) and for previous years (row 13) as well as gross rental payments from the rental of garages (row 14) must be reported on the form.

Business (income acquisition) expenses (deductible expenses)

Income acquisition expenses relating to rental income include the following:

• maintenance and repair costs;
• income-acquisition expenses that are not reimbursed by the tenant;
• amortisation expenses;
• interest payments, allowance payments, and ongoing charges;
• other deductible expenses.

Maintenance and repair costs

These are ordinary maintenance and repair costs incurred by the owner, including repainting, roof and heating repairs, plumbing repairs, etc.

On the other hand, investment-related expenses are not tax-deductible as expenses for the acquisition of income. Investment expenses refers to:

• expenses for the purpose of changing the nature of the property (for example, sub-dividing a dwelling into several smaller dwellings, or converting a residential property into a commercial property);
• expenses for the purpose of improving the property (for example, by installing central heating or a lift);
• expenses for the purpose of expanding the property (for example, adding a room or finishing an attic).

These expenses are to be amortised by applying the amortisation rates provided for this purpose (see below).

For the sake of simplicity, the Luxembourg Inland Revenue considers that renovation costs of up to 20 % of the purchase price (excluding land) do not constitute a major improvement of the property, and therefore deems them maintenance and repair costs.

At the taxpayer's request, significant maintenance and repair costs may be spread over a period of 2 to 5 years. Such costs are deemed significant if their amount exceeds one-half of annual rent. In that case, the taxpayer must provide the information requested in rows 30-31 and 50-51 of the form.

Expenses for the acquisition of income not reimbursed by the tenant

Taxpayers may deduct expenses relating to the rental property, including electricity, heating, water, fire insurance premiums, etc. Such expenses are deductible if they have not been reimbursed by the tenant. These expenses are indicated in rows 32-34 of the form.

Depreciation

The amortisation rate applied to the purchase price (excluding land), plus the notarial deed fees and investment-related expenses, is as follows:

• 6 % where the rental property has been subject to an energy renovation that was completed less than 9 years ago;
• 4 % for buildings that were completed less than 5 years ago;
• 2 % for buildings that were completed 5 or more years ago.

If the price of the land is not known, it may be assessed at 20 % of the total price of the land and the building, including deed fees.

The taxpayer must include the amortisation rate, the value to be amortised, and the amount of the amortisation payment in rows 36-37.

Flat-rate deductions for certain income-acquisition expenses

Rather than itemising maintenance and repair costs, income-acquisition expenses not reimbursed by the tenant, and amortisation expenses, taxpayers may opt to use the flat-rate deduction for such expenses.

The flat-rate deduction is only permitted for properties that the taxpayer owns privately and that were completed at least 15 years prior to 1 January of the tax year in question.

The flat-rate deduction of the above-mentioned income-acquisition expenses is set at 35 % of gross rental income, up to a maximum of EUR 2,700 per year and per property. To request the flat-rate deduction, check the 'yes' box in row 41.

It should be noted that the income-acquisition expenses discussed below are deductible in addition to the flat-rate deduction.

Interest payments

Interest payments on debt incurred in order to finance the rental property are deductible without limit and must be reported in row 42.

Other deductible expenses

Ongoing allowance payments (row 43), management fees (row 44), property tax, water fees, and rubbish-collection fees (row 45) paid by the owner and not reimbursed by the tenant are also deductible as income-acquisition expenses.

Details about loans, interest payments, allowance payments, and ongoing charges should be entered in rows 54-55.

Net rental income (row 24 of Form 190)

Total gross rental income is calculated in row 22 of the form.

Total income-acquisition expenses relating to the rental property are calculated in row 48 and entered in row 23 of the form.

The amount stated in row 24 of Form 190 corresponds to net income from property rentals (gross rental payments less income-acquisition expenses).

Reporting of net income on the income tax return

The amount of net income as determined above must be reported in the taxpayer's income tax return under 'Revenu net provenant de la location de biens' (net income from rental of property).

If the taxpayer owns more than one property, the amount to be reported on the income tax return form is the total net income from the rental of those properties.

Supporting documents

Taxpayers are required to attach a certificate showing their interest payments on the debt incurred to finance the rental property to their income tax return and its annex (Form 190). Upon the tax office's request, the taxpayer must provide the necessary supporting documentation (copies of the deed of purchase for the property, receipts for income-acquisition expenses incurred, etc.).

Non-resident co-owner of a property

Co-ownership refers to ownership of real property by joint owners (such as undivided ownership of property).

Where a non-resident taxpayer owns a rental property in Luxembourg, the taxpayer must report the (non-exempt) rental income on the income tax return form.

Where a non-resident taxpayer owns a rental property abroad, the taxpayer must report the (exempt) rental income if they opt to be treated as a resident taxpayer when filing their income tax return.

If the rental properties are co-owned, the non-resident taxpayer must complete Form 210 (Rental income from co-owned built properties) and Form 200 (Declaration for joint reporting of income from joint business enterprises and co-owned properties).

The shaded portions of Form 210 must be completed only if the taxpayer lives in a portion of the property being rented out.

If more than one property is co-owned and rented out, the taxpayer must complete one Form 210 for each property.

Completing Form 210

General information

General information about the rental property (address, etc.) must be entered in rows 1 to 5.

Receipts

Gross rental payments for the year (rows 8 to 11) and for previous years (row 13) as well as gross rental payments from the rental of garages (row 14) must be reported on the form.

Business (income acquisition) expenses (deductible expenses)

Income acquisition expenses relating to rental income include the following:

• maintenance and repair costs;
• income-acquisition expenses that are not reimbursed by the tenant;
• amortisation expenses;
• interest payments, allowance payments, and ongoing charges;
• other deductible expenses.

Maintenance and repair costs

These are ordinary maintenance and repair costs incurred by the owner, including repainting, roof and heating repairs, plumbing repairs, etc.

On the other hand, investment-related expenses are not tax-deductible as expenses for the acquisition of income. Investment expenses refers to:

• expenses for the purpose of changing the nature of the property (for example, sub-dividing a dwelling into several smaller dwellings, or converting a residential property into a commercial property);
• expenses for the purpose of improving the property (for example, by installing central heating or a lift);
• expenses for the purpose of expanding the property (for example, adding a room or finishing an attic).

These expenses are to be amortised by applying the amortisation rates provided for this purpose (see below).

For the sake of simplicity, the Luxembourg Inland Revenue considers that renovation costs of up to 20 % of the purchase price (excluding land) do not constitute a major improvement of the property, and therefore deems them maintenance and repair costs.

At the taxpayer's request, significant maintenance and repair costs may be spread over a period of 2 to 5 years. Such costs are deemed significant if their amount exceeds one-half of annual rent. In that case, the taxpayer must provide the information requested in rows 39-40 and 58-60 of the form.

Expenses for the acquisition of income not reimbursed by the tenant

Taxpayers may deduct expenses relating to the rental property, including electricity, heating, water, fire insurance premiums, etc. Such expenses are deductible if they have not been reimbursed by the tenant. These expenses are to be reported in rows 42-44 of the form.

Depreciation

The amortisation rate applied to the purchase price (excluding land), plus the notarial deed fees and investment-related expenses, is as follows:

• 6 % where the rental property has been subject to an energy renovation that was completed less than 9 years ago;
• 4 % for buildings that were completed less than 5 years ago;
• 2 % for buildings that were completed 5 or more years ago.

If the price of the land is not known, it may be assessed at 20 % of the total price of the land and the building, including deed fees.

The taxpayer must include the amortisation rate, the value to be amortised, and the amount of the amortisation payment in rows 47-48.

Flat-rate deductions for certain income-acquisition expenses

Rather than itemising maintenance and repair costs, income-acquisition expenses not reimbursed by the tenant, and amortisation expenses, taxpayers may opt to use the flat-rate deduction for such expenses.

The flat-rate deduction is only permitted for properties that the taxpayer owns privately and that were completed at least 15 years prior to 1 January of the tax year in question.

The flat-rate deduction of the above-mentioned income-acquisition expenses is set at 35 % of gross rental income, up to a maximum of EUR 2,700 per year and per property. To request the flat-rate deduction, check the "yes" box in row 51.

It should be noted that the income-acquisition expenses discussed below are deductible in addition to the flat-rate deduction.

Interest payments

Interest payments on debt incurred in order to finance a rental property are deductible without limit and must be reported in row 52.

Other deductible expenses

Ongoing allowance payments (row 53), management fees (row 54), property tax, water fees, and rubbish-collection fees (row 55) paid by the owner and not reimbursed by the tenant are also deductible as income-acquisition expenses.

Details about loans, interest payments, allowance payments, and ongoing charges should be entered in rows 63-64.

Net common rental income (row 68 of Form 210)

Total gross rental income is calculated in row 22 and reported in row 66 of the form.

Total income-acquisition expenses relating to the rental property are calculated in row 56 and entered in row 67 of the form.

The amount stated on row 68 of Form 210 corresponds to net income from property rentals (gross rental payments less income-acquisition expenses).

Completing Form 200

The amount of net common income as determined in row 68 must be reported on page 2 of Form 200, Column 5, in accordance with the percentage held by each co-owner of the property.

Page 2 of Form 200 must be completed, indicating the surname, first name, address (Column 1), as well as the taxpayer number and tax office for each taxpayer (Column 2).

Completing the income tax return

The amount of net income (the taxpayer's proportional share) must be reported in the taxpayer's income tax return under 'Revenu net provenant de la location de biens' (net income from rental of property).

If the taxpayer owns more than one property, the amount to be reported on the income tax return form is the total net income from the rental of those properties.

Supporting documents

Taxpayers are required to attach a certificate showing their interest payments on the debt incurred to finance the rental property to their income tax return and its annexes (Forms 210 and 200). Upon the tax office's request, the taxpayer must provide the necessary supporting documentation (copies of the deed of purchase for the property, receipts for income-acquisition expenses incurred, etc.).

Procedures

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