Last article in our series on tax deductions for real estate in Luxembourg. Today we will focus on the tax-deductible expenses if you own a rental property.

As the owner of a rental property, you have the possibility of deducting a certain number of expenses for tax purposes. It is important to note that these expenses are deductible from your taxes if they are not borne by the tenant.

The actual costs of obtaining

As in the case of the purchase or renovation of a property, you can deduct financing costs and interest expenses related to a loan. There is no limit to the amount of the deductions as long as the property is not available to the owner.

You can also deduct these loan interest expenses from your primary residence. Read the article: Tax deductions for the acquisition of a home.

Are also deductible:

• property taxes and municipal fees (e.g., sewage or wastewater treatment)
• maintenance fees
• renovation costs
• management fees and remuneration of managers
• insurance premiums
• wear damping
• foreign personal taxes (if they are not exempt or chargeable to Luxembourg tax)
• life annuity arrears (see the article on life annuity sale).

The flat-rate deduction

Instead of “normally” deducting the costs of obtaining your rental property, you can opt for a flat-rate deduction of 35% of the rent received as soon as the construction of the property has been completed for at least 15 years.

This deduction option is limited to €2700/year per building (a building with several dwellings is considered as one building). If you have opted for this solution and decide to revert to a deduction of the actual acquisition costs, you will have to wait 15 years before you can benefit from this flat-rate deduction again. More details at impotsdirects.lu.