After a 1-year extension early last year, the specially reduced tax rate on capital gains realised by individual taxpayers on certain real estate assets has not been extended for the tax year 2019. As a reminder, this specific regime, initially introduced for the tax years 2016 and 2017 and aimed at capital gains realised by individual taxpayers on real estate assets, allowed for a reduced tax rate of one-fourth (1/4) of the overall tax rate instead of the generally applicable one-half (1/2) of the overall tax rate.
While the non-extension of the specially reduced rate was expected due to the temporary nature of the measure, it nonetheless shows a change in strategy of the new Luxembourg government on how to tackle the lack of supply of real estate and soaring real estate prices. Indeed, other measures have been deemed more apt to tackle such issues, such as significantly increasing the state sponsored construction of affordable housing.
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