You have just inherited your parents' house. Since this is in direct line, you have not paid taxes.
In the family, everyone is housed, your decision is to sell this property.
Will you be taxed on this sale ?
The property is not your main residence, so yes, you will be taxed on the capital gain. At this stage, it is important to know when the last deed with payment happened on this property. In other words, when did your parents buy the house?
If more than two years ago (consider five years starting 1st Jan 2025), it will be a capital gain on the sale taxed up to 22.89% (except if you seize the opportunity in 2024, where the maximum rate is 11.45%). Otherwise, the speculation profit will be taxed up to 45.75%. Here we talk about maximum, because it depends on your other taxable income.
In our case, the parents bought the house in 1982 for a value of € 60,000 all fees included. They then carried out renovations over the years. There was the replacement of the windows in 1990 for € 10,000, the replacement of the heating in 1998 for € 15,000 and the new veranda purchased € 30,000 in 2020. Your parents were organized and you are lucky to have a binder with all the invoices related to the investments in the house.
To sell the property, you used an agent who sold the house for € 650,000. You paid an agency fee of €20,000.
How will the capital gain be calculated?
From the total amount of the sale of the property, you can subtract the following elements: agency fees, investments, purchase price of the property all fees included. The different amounts will be reassessed according to the year in which they occurred. The revaluation coefficients can be found on page 141 of the following document: https://impotsdirects.public.lu/dam-assets/fr/legislation/LIR/LIR2023.pdf
For our specific case:
Sale : 650.000€
Agency fees: 20.000€
Acquisition in 1982: 60.000 x 1.95 = 117.000€
Windows replacement in 1990 = 10.000 x 1.79 = 17900€
Heating replacement in 1998 = 15.000 x 1.5 = 22.500€
Purchase veranda in 2020 = 30.000 x 1 = 30.000€
Capital gain : 442.600€
From this capital gain, you can deduct 2 types of reductions:
75.000€ for direct line succession (1x per person)
€50,000 renewable every 10 years, this amount being doubled in case of joint taxation
You make a joint declaration with your spouse, in this case, you can deduct 75.000 + 2x50.000 = 175.000 €. The capital gain taken into account for taxation will therefore amount to 442,600 – 175,000 = €267,600.
Considering a capital gain taxed at maximum 21%, you will therefore have to pay at most the sum of 267,600 x 0.2289 = 61,254 €.
What to remember?
If it has been less than two years since the house was bought by your parents (five years starting 1st Jan 2025), it is better to wait.
Always keep the documents related to the investment in a property, this is valuable both to reduce the capital gain and to be able to give a history to future buyers and justify the sale value of the property.
Updated 06 Nov 24
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