Costs of Selling a Property in Luxembourg
When selling a property, different costs apply. Although not all of them are the responsibility of the seller, it is best to know them all. Here they are :
First of all, the notary fees are included in the selling expenses which involve the costs for the notarial act and other costs for the government.
On the one hand, the notary fees include:
- The fees itself, set at around 1% by the Grand-Ducal Regulation of 3 July 2015. These fees pay the work of the notary and its collaborators.
- Any possible disbursements such as expenses paid by the notary for external services and documents (mortgage, cadastre, surveyor, etc.).
On the other hand, taxes for the Registration Duties, Estates and VAT Authority (AED) should also be included. In Luxembourg, they are at 7% when selling a house, an apartment or a building plot: 6% are for registration fees and 1% for transcription costs.
Who Pays the Notary Fees?
Generally, the buyer is in charge of paying the notary fees. Moreover, if they meet certain criteria, they can be entitled to a tax credit on notarial deeds. This is the "Bëllegen Akt", which is limited to 20,000 euros.
Capital gain taxes
Then, whether you are a resident or not, you must declare any sale of real estate to the AED in Luxembourg. More precisely, you must declare the capital gain realized on your tax return or in a dedicated form. The same applies if you are a resident taxpayer and are selling a property abroad.
Nevertheless, be aware that you might not have to pay tax on the capital gains that you have declared. Indeed, two types of sales are exempt from taxes in the Grand Duchy:
- Sale of a main residence.
- Sale of a building plot, an apartment or a house to the state or a municipality.
Other capital gains are taxable according to the following model:
- If the sale happens within the two years following the acquisition of the property, the capital gain is considered as speculative gain. Progressive rates therefore apply, with a maximum of 40%.
- If the sale happens two years after the purchase, it is then a capital gain on sale. The maximum rates are then 20.5%.
Real estate agent's commission fees
Finally, if you used the services of a real estate agent to sell your house or apartment, you must also include the commission fees in the sales costs. The fees pay for the services of the expert, from the estimation of your property to signing the deed of sale.
When the seller uses the services of a real estate agent for the sale of their property, they put them in charge of it all. In fact, the commission fees are usually included in the price displayed. Here is an example of common wording in an ad: "price of 450,000 euros, including 14,000 euros of agency fees, which will be paid by the seller".
In addition, the amount of these fees may be proportional to the selling price (6 to 8%, or even more with a more luxurious agency) or fixed at a flat rate.