Selling Luxembourg Property Before Departure 2026: Capital Gains, Main Residence Exemption and Property Tax

What changes in 2026: capital gains regime, demi-taux global and the property tax reform

The 2026 property tax reform (reforme de l’impot foncier) finally enters into force in Luxembourg, replacing the old impot foncier with a modernised three-tier system: impot foncier (IFON, the base property tax), impot sur la mobilisation des terrains (IMOB, on undeveloped land kept idle) and impot sur la non-occupation des logements (INOL, on long-term vacant homes). This affects sellers indirectly: the IMOB and INOL pressure on owners encourages sale, while the IFON re-assessment of the valeur de base now reflects current market levels. For income-tax purposes, the capital gains regime remains governed by articles 99bis to 99sexies LIR, with key thresholds confirmed for 2026.

The standout rule for departing residents: the long-term capital gain on real estate (held more than 2 years) is taxed at the demi-taux global, i.e. half the global average rate of the taxpayer for the year, capped at half of the top marginal rate. For a top-rate taxpayer this caps the effective rate around 21% in 2026 (vs the standard top marginal of around 42% plus solidarity tax). Short-term gains (held 2 years or less) are taxed at full progressive rates as ordinary income (benefice de speculation, article 99bis LIR).

Step-by-step: structuring the sale around your departure

1. Confirm the holding period (2 years). Compute from the date of acquisition (acte notarie of purchase) to the date of sale (acte notarie of sale). The 2-year threshold separates the speculative regime (full rate) from the long-term regime (demi-taux global). For inherited property, the holding period generally rolls over from the deceased.

2. Check the main residence exemption (article 102bis LIR). The principal residence (residence habituelle et continue) sale is fully exempt – even if outside the 2-year window – provided it has been your habitual home until the sale or until departure under the recent administrative tolerance. Sale within 12 months of leaving the property generally preserves the exemption; longer delays put it at risk.

3. Compute the gain. Sale price minus acquisition cost minus capitalised improvements minus notary fees minus enregistrement and transcription duties at acquisition. Improvements must be supported by invoices retained for 10 years per article 99sexies. The annual abattement de cession is EUR 50,000 per taxpayer over a 10-year period (EUR 100,000 for jointly taxed couples).

4. Notarised sale and tax follow-up. The notaire (notary) handles the registration tax (droit d’enregistrement at 6% standard plus 1% droit de transcription) due from the buyer, and reports the sale to the ACD via the appropriate annexe. The seller declares the gain on form 100 the following year. If you are no longer resident at filing time, file via MyGuichet as a non-resident (article 156 LIR).

Special cases: inherited property, married couples, second homes, foreign buyers

Inherited property

Inherited Luxembourg real estate carries over the deceased’s acquisition price and acquisition date for capital-gain purposes. If the deceased held it more than 2 years, the long-term regime and demi-taux global apply on first sale. Inheritance tax (droits de succession) was paid at inheritance; capital gain is layered on top of it on resale.

Married couples and joint taxation

Couples taxed jointly (classe 2) have a combined EUR 100,000 abattement de cession over a rolling 10-year period across both spouses. If only one spouse holds the title legally, the gain still benefits from joint taxation if the household is taxed under classe 2 in the year of sale. Joint taxation continues for the resident period of the move year and may be relevant if assimilation under article 157ter LIR is opted for.

Second homes and rental properties

The main residence exemption applies only to the principal home. A second home, holiday flat, or rental property is taxed under the demi-taux global (long-term) or full rate (short-term). Depreciation (amortissement) deducted over the holding period is added back to the capital gain calculation, increasing the taxable amount. Mortgage interest deducted previously remains deducted – it does not reverse.

Foreign buyers and Bail emphyteotique

Sales to foreign buyers are unrestricted in Luxembourg – there is no nationality limit. Increasingly, sales include a bail emphyteotique (long lease) over the land while the building is sold; this can complicate gain calculation and is best handled with the notaire and a tax adviser.

Capital gains examples and the impact of the 2-year rule

The new property tax landscape (IFON, IMOB, INOL) and impact on sale price

From 2026 the IFON replaces the legacy impot foncier, with re-assessed valeurs de base reflecting market values across all 102 communes. The IMOB targets developable land kept idle; the INOL targets long-term vacant residential property. Both are commune-administered and aim to reduce land hoarding and vacancy.

For a seller, the IFON appears in the cadastre data the notaire provides at sale; the buyer pays from the date of acte notarie. IMOB and INOL exposure can become a sale argument if a buyer plans to occupy or develop quickly. Disclose any pending IMOB or INOL assessment – non-disclosure can give rise to vices caches claims.

Timeline: ideal 12-month sale-and-departure plan

Month -12: Decide whether to sell before or after departure. Estimate gain under both scenarios. Consult a tax adviser if amounts above EUR 100,000 are at stake.

Month -9: List with an agence immobiliere or as private sale. Secure a Passeport energetique (energy performance certificate) – mandatory for any sale.

Month -6: Receive offer, sign compromis de vente. The buyer pays a deposit (typically 10%). The notaire begins title and cadastre checks.

Month -3: Sign the acte notarie. The notaire collects the droit d’enregistrement and droit de transcription from the buyer. Funds are released to the seller.

Month 0 (departure): Commune deregistration. The certificat de radiation is filed with the ACD – see deregistration guide and tax residency guide.

Year +1 (March-December): File the declaration de l’impot sur le revenu including the capital gain on form 100. Apply the EUR 50,000 / 100,000 abattement and demi-taux global if eligible. Pay the assessed tax via MyGuichet.