{"id":17403,"date":"2022-04-07T09:00:54","date_gmt":"2022-04-07T07:00:54","guid":{"rendered":"https:\/\/my-life.lu\/?p=17403"},"modified":"2024-04-19T13:43:45","modified_gmt":"2024-04-19T11:43:45","slug":"getting-the-most-out-of-your-rental-property-12016","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/getting-the-most-out-of-your-rental-property-12016\/","title":{"rendered":"Getting the most out of your rental property"},"content":{"rendered":"
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Renting out your flat or house can be a great way to boost your income. But doing so comes with various tax implications, and knowing exactly what they are is crucial. You need to know how to properly declare the income, how the income will be taxed and \u2013 importantly \u2013 how to take advantage of any tax benefits you\u2019re entitled to. myLIFE is here to help you get started.<\/p>\n

If you\u2019re in the lucky position of having a property to rent out \u2013 perhaps you\u2019ve just moved in with a partner \u2013 renting it out can bring in some extra income. But it\u2019s important not to just rush straight out and advertise your place. You need to read up on how rental income is taxed in Luxembourg first. Luckily, myLIFE has put together this handy guide to answer all your questions.<\/p>\n

How do I declare my rental income?<\/h2>\n

If you rent out a property in Luxembourg<\/strong> and receive annual rental income, i.e. the rent received over the tax year, of more than \u20ac600, you need to declare it to the tax authorities.<\/p>\n

Whether you\u2019re a resident or not, you have to declare the rent in the \u201cMod\u00e8le 100<\/strong><\/span><\/a>\u201d tax return form under \u201cRevenus nets provenant de la location de biens\u201d (net rental property income). Your rental income will then be taxed at the overall tax rate along with any other income.<\/p>\n

\u2192 If you\u2019re renting out a property in a different country<\/strong>, you have to declare the rent in Luxembourg if you\u2019re a resident here or treated as one for tax purposes<\/strong><\/span><\/a>. But the rental income is taxable in the country where the property is located, so you declare it under the \u201crevenus exon\u00e9r\u00e9s<\/strong>\u201d (exempt income) column. The tax authorities will then take it into account when calculating the average tax rate to be applied to your total taxable income in Luxembourg.<\/p>\n

If your deductible expenses are more than your rental income, the net negative income (d\u00e9ficit foncier) is carried over to your other taxable income.<\/p><\/blockquote>\n

How do I work out how much of the rent is taxable?<\/h2>\n

Renting out your flat means you can enjoy various tax deductions. To claim them and work out your net taxable rental income, fill out \u201cAnnexe 190\u201d<\/strong><\/span><\/a>, \u201cRevenus de la location de propri\u00e9t\u00e9s b\u00e2ties\u201d (rental income from residential properties) and enter your deductible expenses or \u201cincome-related expenses\u201d.<\/p>\n

You have to fill in this form in addition to the \u201cMod\u00e8le\u00a0100\u201d form and send it to your tax office. Your net rental income will thus be the rent you receive over the year minus your income-related expenses.<\/p>\n

\u2192 If you\u2019re the sole owner of the property being rented or own it with your spouse (married or a jointly taxed partnership), you have to fill out Form 190. If, however, you own the property jointly with taxpayers of a different tax household, you have to fill out Form<\/strong>s<\/strong> 210<\/strong><\/span><\/a>, \u201cRevenus de la location de propri\u00e9t\u00e9s b\u00e2ties de la communaut\u00e9\u201d (rental income from jointly owned residential properties), and 200, \u201cD\u00e9claration pour l\u2019\u00e9tablissement en commun des revenus d\u2019entreprises collectives et de copropri\u00e9t\u00e9s\u201d (declaration establishing income from joint ventures and co-owned property) and send them to the tax office covering the area where your property is located.<\/p>\n

NB<\/strong>: If your deductible expenses are more than your rental income, the net negative income (d\u00e9ficit foncier<\/em>) is carried over to your other taxable income (salary, pensions, investment income, etc.).<\/p>\n

Useful info<\/strong>: Since 2017, anyone renting out their property to an accredited social housing body<\/strong><\/span><\/a> has been eligible for an exemption for 75% of their net rental income as of the 2023 tax year (50% for the years 2017 to 2022).<\/p>\n

What income-related expenses can I deduct from my rental income?<\/h2>\n

Deductible income-related expenses are any out-of-pocket costs you incur to earn, guarantee or retain your rental income. Examples include property depreciation, maintenance and repair costs, fees not covered by the tenant, debit interest and all other deductible charges.<\/p>\n

You can deduct the depreciation of your property from your taxable income throughout the term of the lease.<\/p><\/blockquote>\n