What is the transfer of real estate capital gains and what are its general conditions?
The transfer of real estate capital gains allows the taxation of a capital gain realized in 2024 to be deferred by reinvesting it in one or more replacement properties under certain conditions. Only the taxpayer who realized the capital gain (or their successors in case of death) can request the transfer when filing their tax return. The replacement property must be located in Luxembourg and meet specific criteria, particularly in terms of social rental management or energy performance. The transfer must be completed by the end of 2026, with a possible two-year extension under certain conditions. The transferred capital gain reduces the acquisition cost of the replacement property and becomes taxable if specific conditions are no longer met.
Who can request the transfer and how should it be done?
Only the taxpayer who realized the capital gain can request its transfer when filing their tax return. In case of death before the transfer, their successors may request it. In the case of joint taxation, each spouse can request the transfer for their share. The request must be submitted to the competent tax office and specify the amount concerned.
On what types of properties can the capital gain be transferred, and under what conditions?
The transfer can be made to:
Properties intended for social rental management (article 49 de la loi du 7 août 2023 sur le logement abordable).
OR
Residential buildings meeting the A+ level in energy performance, thermal insulation, and environmental performance.
To benefit from the transfer, an amount at least equal to the capital gain must be reinvested in equity before the end of the year following the sale of the original property. The portion of the capital gain allocated to the land cannot exceed 50% of the total transferred capital gain.
What deadlines and minimum amounts must be respected?
The transfer must be completed by the end of 2026. A two-year extension is possible upon a justified request if the replacement property is under construction. If the sale price is only partially reinvested, the capital gain is transferred proportionally to the reinvested amount. The non-transferred portion is taxable in the year the capital gain was realized.
What are the tax consequences of the transfer?
The transferred capital gain reduces the acquisition cost of the replacement property. It becomes taxable if the replacement property:
Is allocated to a commercial, industrial, mining, or craft business.
No longer meets the conditions for social rental management or energy performance.
Becomes the taxpayer's primary residence.
Failure to comply with the obligations or an insufficient transfer will result in a tax correction for the relevant years.
What documents must be kept to justify the transfer?
The taxpayer must retain supporting documents for the sale of the original property and the acquisition of replacement properties to allow for any future verification.
Who can request the transfer and how should it be done?
Only the taxpayer who realized the capital gain can request its transfer when filing their tax return. In case of death before the transfer, their successors may request it. In the case of joint taxation, each spouse can request the transfer for their share. The request must be submitted to the competent tax office and specify the amount concerned.
On what types of properties can the capital gain be transferred, and under what conditions?
The transfer can be made to:
Properties intended for social rental management (article 49 de la loi du 7 août 2023 sur le logement abordable).
OR
Residential buildings meeting the A+ level in energy performance, thermal insulation, and environmental performance.
To benefit from the transfer, an amount at least equal to the capital gain must be reinvested in equity before the end of the year following the sale of the original property. The portion of the capital gain allocated to the land cannot exceed 50% of the total transferred capital gain.
What deadlines and minimum amounts must be respected?
The transfer must be completed by the end of 2026. A two-year extension is possible upon a justified request if the replacement property is under construction. If the sale price is only partially reinvested, the capital gain is transferred proportionally to the reinvested amount. The non-transferred portion is taxable in the year the capital gain was realized.
What are the tax consequences of the transfer?
The transferred capital gain reduces the acquisition cost of the replacement property. It becomes taxable if the replacement property:
Is allocated to a commercial, industrial, mining, or craft business.
No longer meets the conditions for social rental management or energy performance.
Becomes the taxpayer's primary residence.
Failure to comply with the obligations or an insufficient transfer will result in a tax correction for the relevant years.
What documents must be kept to justify the transfer?
The taxpayer must retain supporting documents for the sale of the original property and the acquisition of replacement properties to allow for any future verification.
Updated on: 10/02/2025
Thank you!