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Rent and taxes in Luxembourg: what you can and cannot deduct
Learn if rent is tax-deductible in Luxembourg and what landlords can deduct from their rental income.
Many taxpayers wonder whether they can deduct their rent on their tax return in Luxembourg. The answer depends on your situation: are you a tenant or a property owner who rents out real estate?
Tenant: rent is not deductible
If you are a tenant of your main residence, the rent you pay is not a deductible expense on your tax return.
The Luxembourg tax system do not allow this amount to be subtracted from your taxable income. Even though rent is often a significant part of your budget, it is not considered a deductible expense for individuals.
Property owner (rental income): certain expenses are deductible
The situation is different if you are a property owner and receive rental income from real estate. In this case, your rental income is taxable, but you can reduce your taxable income by deducting certain expenses, known as “expenses of acquisition” (frais d’obtention).
These include, among others:
- renovation and repair costs,
- depreciation of the property,
- loan interest incurred to finance the purchase of the property,
- management fees, insurance, property tax, and certain charges that cannot be passed on to the tenant.
Alternative flat-rate deduction
Instead of deducting actual expenses, the property owner may opt for a flat-rate deduction. This deduction amounts to 35% of gross rental income, capped at 2.700€ per year and per building.
To qualify, the property must form part of the owner’s private assets and must have been completed at least 15 years before January 1 of the tax year.
Important information !
If you choose this flat-rate deduction, you cannot claim certain actual expenses. The choice should therefore be made carefully depending on your circumstances.
Property owner (main residence): limited deductions
If you own and live in your property, you cannot deduct renovation or maintenance costs from your taxable income. However, certain costs related to your mortgage are deductible.
The interest paid on your mortgage loan for your main residence is deductible each year. The deduction limit varies depending on your personal situation, whether you are single, married, or have children.
In the year of purchase, you can also deduct bank and notary fees related to the opening of the credit.
