Buying to Let in Luxembourg: The Numbers, the Rules and the 2026 Measures

In this article

1. Demand is not the problem
2. Financing: 80% at most
3. Purchase costs for investors
4. The rent you can charge
5. Gross and net yield
6. Taxation of rental income
7. Accelerated depreciation and the 2026 regime
8. Social rental management
9. What makes a good buy-to-let in Luxembourg
10. Our take

Demand is not the problem

Rental demand in Luxembourg City is strong and broad: professionals on first postings, couples who are not ready to buy, people waiting for a new build to be delivered. Well-presented homes near the tram and the main employment areas let quickly. Our guides to the rental market and the best quarters for professionals describe where demand is concentrated.

The question for an investor is not whether a flat will let. It is what it will return after costs, tax and financing.

Financing: 80% at most

Since 2021, loans for property that is not the borrower's principal residence, including buy-to-let, are limited to 80% of the property's value under the CSSF's loan-to-value rules. An investor therefore needs at least 20% of the price in equity, plus purchase costs. Our mortgage guide explains the rules.

On a €550,000 apartment, that means at least €110,000 of your own money before duties and fees.

Purchase costs for investors

• Registration and transcription duties of 7% apply, plus the communal surcharge in Luxembourg City where applicable.
• The Bëllegen Akt tax credit is for owner-occupiers, not investors.
• Specific, time-limited measures for rental investment have existed since 2024, including a tax credit on registration duties for buyers who let the home for a minimum period. They have been modified and extended several times. Check the current position with the notary before relying on one.
• For off-plan purchases, the government announced in July 2026 a temporary three-year exemption from duties on the construction part of homes bought before 80% completion, subject to legislation.

Our guide to registration duties sets out the calculation.

The rent you can charge

Luxembourg law caps the annual rent of a residential property at 5% of the capital invested, revalued over time and depreciated for older buildings. For a recent purchase at market price, the ceiling is usually above the market rent, so it does not bind. For older buildings bought long ago, it can. Rent can be adjusted at most every two years, by at most 10% each time, and indexation clauses are not valid. See our guide to the 5% rent rule.

Since August 2024, the deposit is capped at two months' rent, agency fees are split 50/50 with the tenant, and leases must be written. Our guides to security deposits and agency fees cover the details.

Gross and net yield

Investors often quote the gross yield: annual rent divided by purchase price. It is a useful first filter but a misleading final answer.

A realistic net figure deducts:

• charges that cannot be passed on to the tenant, including the syndic's fees and the owner's share of building costs;
• contributions to the co-ownership's mandatory works fund;
• maintenance and repairs;
• insurance;
• periods without a tenant;
• management fees if you use an agent;
• property tax.

Then comes financing, and then income tax. The official figures on rents and prices are published by STATEC and the Housing Observatory; our market analysis uses them. In Luxembourg City, net yields are modest by European standards, which is why the tax treatment matters so much.

Taxation of rental income

Rental income from a home held privately is taxed as part of your income in Luxembourg. The taxable amount is the rent received minus deductible expenses, which include in particular:

• loan interest;
• non-recoverable charges and maintenance;
• insurance and property tax;
• depreciation of the building, not the land.

Depreciation is where the policy changes of recent years matter most.

Accelerated depreciation and the 2026 regime

As part of the 2024 housing package, an accelerated depreciation regime was introduced for new rental housing, allowing a higher annual rate than the standard one for a limited number of years.

On 16 July 2026 the government announced a new regime, presented as "three times 6": 6% a year for six years on a base of up to €600,000 per building, with 2% on any amount above that threshold, with no time limit. According to the announcement and market commentary, it would become the standard regime from 1 January 2027, with investors able to choose between the current and the new regime for acquisitions in 2026.

These are announced measures subject to legislation. Before buying, have a tax adviser model the depreciation on the actual acquisition, because the difference in after-tax return can be substantial.

Social rental management

An alternative worth knowing is social rental management (gestion locative sociale). The owner lets the home to an approved organisation, which sub-lets it to households on low incomes at a rent below the market. In exchange, the owner receives a guaranteed rent, whether or not the home is occupied, maintenance follow-up, and, according to Guichet.lu, a 75% tax exemption on net rental income. For some owners, particularly of smaller or older flats, the net result can compare well with a market let.

What makes a good buy-to-let in Luxembourg

• Location near the tram or a station and near employment: Kirchberg, the station area, Bonnevoie, Limpertsberg, Gasperich.
• A good energy class, which lowers tenants' bills and the co-ownership's minimum works fund contribution. See our guide to the energy passport.
• A well-run building, with sound accounts and no large deferred works. See our guide to buying in a co-ownership.
• A layout that suits the demand: one- and two-bedroom apartments, or larger flats that work well as shared housing.

Our take

Buying to let in Luxembourg is a long-term, low-yield, low-vacancy investment. It works for investors who can put in substantial equity, who understand the tax treatment, and who choose the right building in the right quarter. It works less well for investors counting on high rent growth, because the lease rules are designed to prevent it.

We manage rentals for owners across Luxembourg City, from finding tenants to inventories and renewals. See Rent with us, our properties for sale, or contact us to discuss a specific property.

This article describes general rules and market practice in Luxembourg and is not legal, tax or financial advice. Rules and announced measures change; confirm the position that applies to you with a notary, your bank or a tax adviser before signing.