Luxembourg Property Investment 2026
Luxembourg's property market is characterised by high prices and strong demand. The country has a significant international workforce requiring housing, supporting a robust rental market despite constrained yields.
Understanding Gross vs Net Yield
Gross yield = Annual rent / Property price × 100. Simple measure ignoring costs. Net yield = (Annual rent − All costs) / Property price × 100. More realistic measure of actual return.
Tax Treatment of Rental Income
Rental income is taxed at your progressive income tax rate. Key deductions include mortgage interest, building depreciation (2%/year), maintenance, management fees, and insurance. A Luxembourg tax advisor can help structure your investment efficiently.
FAQ
What is a good rental yield in Luxembourg?
Gross rental yields in Luxembourg City are typically 2.5–4%, reflecting the high property prices. Net yields after costs are often 1.5–3%. Yields are higher in regional towns (Esch, Differdange) where prices are lower relative to rents.
How is rental income taxed in Luxembourg?
Rental income is added to your total income and taxed at your progressive income tax rate. Allowable deductions include mortgage interest, maintenance costs, property management fees, insurance, depreciation (2% of building value per year), and relevant professional expenses.
Is Luxembourg property a good investment?
Luxembourg property has shown strong capital appreciation but rental yields are compressed by high prices. The country's stable economy, international workforce, and housing shortage support long-term demand, but purchase costs and taxes should be factored in.
What is the vacancy rate for Luxembourg rentals?
Demand for rentals in Luxembourg City is very high, with vacancy rates typically 1–3% for well-located properties. Regional towns may have slightly higher vacancy but are growing due to improved transport links.