Capital gains on inherited property: why the date of death changes everything

Which price and date does the tax office use for inherited property?

The deceased's, not the date of death. For the Luxembourg Inland Revenue (ACD), property received through an inheritance is deemed acquired on the date of the last acquisition for consideration, in practice the deceased's purchase, and at the price paid under that deed (ACD). You step into their shoes.

The consequence surprises many heirs. The value declared for inheritance tax is not used as the purchase price for income tax. Luxembourg does not step up the value of the property at death. All the growth accumulated since your parents bought it, sometimes thirty or forty years of market, goes into the capital gain you will declare when you sell.

Two reassuring points. The transfer itself is not subject to income tax: only the sale is. And for a sale after more than five years, the original purchase price is revalued by a coefficient that depends on the year of purchase, published on the form 700 for the year of sale (form 700F 2026). The older the purchase, the higher the coefficient.

Is the five-year period counted from the date of death?

No, from the deceased's purchase. Since the law of 22 May 2024, applicable from tax year 2025, a sale within five years of acquisition produces a speculation gain, taxed at the full progressive scale, with no revaluation and no allowance. After five years, the gain is taxed at half the global rate, so at most about 21 %, plus the employment fund contribution (Guichet.lu).

For an heir, those five years run between two acquisitions for consideration: the inheritance does not restart the clock. Two concrete cases. Your parents bought in 2000 and you sell in 2026, one month after the death: ownership is well over five years, so you pay half the global rate, using the 2000 coefficient. Your father bought in 2023, died in 2025 and you sell in 2026: less than five years have passed since his purchase, so the gain is speculative and taxed at the full scale.

And forget the quarter of the global rate that was talked about so much. It ended on 30 June 2025, or 30 September 2025 for a preliminary sale agreement (compromis) registered before 30 June. It does not apply to sales in 2026.

Which allowances can an heir use when selling?

Two, and they add up. The first is the ten-year allowance of €50,000 per person, €100,000 for a jointly taxed couple, reduced by whatever you have already used over the previous ten years. The second is specific to inheritances: up to €75,000 more if the property is a building inherited in the direct line that was your parents' last main residence (ACD).

The €75,000 allowance has its own rules. It is calculated on each heir's share, applies to only one property per taxpayer, is deducted before the €50,000 allowance and, like it, cannot create a loss. It still applies if your parents had moved out before the death, provided the house was their last main residence (fiduciaire-expert.lu). Be careful: no allowance applies to a speculation gain.

Your parents' home, inherited in the direct line, owned for more than five years counting from their purchase: up to €125,000 of allowances per heir, then half the global rate.

Inherited a property and thinking of selling? Start with what it is really worth, before you calculate the gain. Get my free valuation →

Worked example: your parents' house sold in 2026

Take two children who inherit equal shares of the house where their parents lived, bought in 1990 for €200,000. It sells for €1,200,000 in 2026. To keep things simple, we ignore purchase costs, works and selling costs, all of which would reduce the gain.

First, the holding period: from 1990 to 2026, well over five years, regardless of the death having happened last year. Next, the revalued price: with an indicative coefficient of 2.05 for 1990, to be checked on the form 700 for the year of sale, €200,000 becomes €410,000. The gain is €1,200,000 minus €410,000, so €790,000, or €395,000 per child.

Each child then deducts €75,000 for the parents' main residence, followed by the €50,000 ten-year allowance if they have not already used it: €125,000 in total. That leaves €270,000 taxable per child, at half the global rate. At the maximum rate of 21 %, that comes to at most about €56,700 per child, before the employment fund contribution. The real amount depends on each child's other income and may be much lower.

The counter-example hurts. Suppose your parents bought this house in 2023 for €1,100,000 and you sell it for €1,200,000 in 2026. Less than five years since their purchase: a speculation gain of €100,000, €50,000 per child, taxed at the full progressive scale, up to 42 % plus the employment fund contribution, with no revaluation and no allowance. If you wait until five years have passed since their purchase, the same gain moves to half the global rate and the allowances can bring it down to zero.

Where does the date of death really matter?

It does not set your purchase price, but it carries weight elsewhere. The opening of the estate is the moment at which the tax office checks whether the property was your parents' last main residence, the condition for the €75,000. The death also starts the deadline for the inheritance tax return, 6 months for a death in Luxembourg, 8 months elsewhere in Europe, with a value on the day of death that the authorities can check.

According to some fiduciaries, inheritance tax paid might partly be added to the acquisition price if the sale takes place within three years of the inheritance. The legal basis has not been confirmed: ask your tax adviser to check. In the direct line, where the legal share is exempt, this mainly concerns brothers, sisters, nephews and other heirs.

Two situations change things again. If you move in and make the property your main residence, its later sale may be exempt, under conditions. And if one heir buys out the others with a balancing payment (soulte), the share bought out is, according to common doctrine, a new acquisition for consideration with its own date and price: a new five-year period may run on that share, to be confirmed. The division itself carries a duty well below the 7 % charged on a sale: ask your notary to work out the figure.

How do you sell inherited property at the right time?

By preparing the file before setting the price. Find the deceased's purchase deed, with its date and price, and the invoices for major works, which are revalued too. Check whether each heir has already used their €50,000 allowance in the past ten years. Work out the date on which five years since the deceased's purchase will be reached. Remember that the gain is taxed in the year of the notarial deed. Then have the property valued on actual sales: over the twelve months to the end of June 2026, an existing apartment in Luxembourg sold for an average of €7,712 per m² and a house for €945,274 on average (Le Logement en chiffres no. 20).

At Secretimmo, we value inherited property on the basis of actual sales, we work with your notary and, if the heirs prefer discretion, we sell off-market to buyers we have already identified. Start with the free estimator at secretimmo.lu/valuation: a range in two minutes. The detailed valuation is free if a mandate is signed within the week, otherwise it is invoiced at €600 excluding VAT.

This article draws on the ACD and Guichet.lu pages on selling real estate, form 700F 2026, fiduciaire-expert.lu and Le Logement en chiffres no. 20 (Observatoire de l'Habitat and STATEC). The revaluation coefficient and the example are indicative and do not replace the advice of your notary or tax adviser.

Frequently asked questions

Does the value of the property on the day of death become my purchase price?

No. For income tax, you take over the deceased's purchase price and date. The value declared for the inheritance is not the base for the capital gain, but the original price is revalued if the sale takes place more than five years after their purchase.

If I sell less than five years after the death, is it a speculation gain?

Not necessarily. The five years are counted from the deceased's purchase, not from the death. Parents who bought in 2000: a sale in 2026, even a month after the death, is taxed at half the global rate. A purchase in 2023: a sale in 2026 is still speculative.

Who is entitled to the €75,000 allowance?

An heir in the direct line who sells a building that was their parents' last main residence. It is calculated on each heir's share, applies to only one property, comes on top of the €50,000 ten-year allowance and cannot create a loss.

How much tax on the sale of my parents' house?

Example: a house bought for €200,000 in 1990, sold for €1,200,000 in 2026 by two children. After indicative revaluation and €125,000 of allowances each, €270,000 is taxable per child, so at most about €56,700 each at the maximum rate of 21 %, before the employment fund contribution.

Does the quarter global rate still apply in 2026?

No. It ended on 30 June 2025, or 30 September 2025 for a compromis registered before 30 June. In 2026, a gain after more than five years is taxed at half the global rate, at most about 21 % plus the employment fund contribution.