Three key takeaways
1. Your rental income is taxed on a net basis, so make sure you calculate your deductible expenses carefully.
2. From 2026, sustainable energy renovations of rental properties can be depreciated at 10%.
3. Unpaid rent insurance and appropriate cover help protect your rental income.
Letting out a property is a way to generate additional income and often to prepare for the future. However, it is important to declare your rental income correctly and protect your investment. Good news for 2026: the tax depreciation rate for sustainable energy renovation works carried out on rental properties is increasing from 6% to 10%. Becoming a landlord quickly raises practical questions. Which rental income must I declare? What expenses can I deduct? What happens if my tenant stops paying rent? At Foyer, we are here to help you understand both the tax aspects of your property and the protection solutions that can safeguard you against unexpected situations.
How is your rental income taxed?
In Luxembourg, you are not taxed on the gross rent you receive, but on your net rental income. This corresponds to the rent collected, less the expenses relating to the property (referred to by the tax authorities as acquisition expenses). Only rent effectively received and expenses actually paid during the year are taken into account.
This net income is added to your other income and taxed according to the ordinary progressive tax scale. An important point that is often overlooked: if your deductible expenses exceed your rental income, your net rental income becomes negative. This negative result can then reduce your overall taxable income and therefore lower your tax bill.
Expenses you can deduct
The main expenses that can be deducted from your rental income are:
- Interest paid on the loan used to finance the rented property;
- Maintenance and repair costs (repainting a wall, replacing a faulty boiler, repairing seals), deductible in the year in which they are paid;
- Building depreciation, reflecting the loss in value of the structure over time. Depreciation applies only to the building itself, not to the land;
- Property management fees and condominium charges that cannot be recovered from the tenant;
- Insurance premiums covering the rented property.
The depreciation rate depends on the age of the property and its completion date. If your property was completed at least 15 years ago, you may choose a flat-rate deduction of 35% of the rental income (instead of depreciation and maintenance expenses), capped at €2,700 per year and per property.
Good to know
It is essential to distinguish maintenance from improvement works. Completely refurbishing a kitchen, adding a conservatory or extending the property are considered improvements. These costs must be deducted progressively through depreciation rather than in a single year. Be sure to keep all invoices and supporting documents.
New for 2026: more favourable depreciation for energy-efficient renovations
From 2026 onwards, the depreciation rate applicable to sustainable energy renovation works carried out on rental properties will increase from 6% to 10%. In practical terms, the government allows you to deduct the cost of these works more quickly. This is a strong incentive to improve your property’s energy performance, while also protecting its long-term value and enhancing tenant comfort.
Rental investment: the new “3 × 6” depreciation scheme
Presented on 16 July 2026 as part of the “Booster fir de Wunnengsbau” package, a new accelerated depreciation scheme aims to improve the profitability of rental property investments. It is worth considering if you are planning to purchase a property to let.
Good to know: New in 2026
The “Booster fir de Wunnengsbau” package introduces accelerated depreciation based on the “three times 6” principle: 6% per year for 6 years, provided that the depreciable basis does not exceed €600,000 per property. Above this threshold, a rate of 2% applies to the entire depreciable basis with no time limit. Below €600,000, this scheme is more advantageous than the current 4% regime; above that amount, it may be less favourable. For acquisitions made in 2026, taxpayers may choose either the old or the new regime. From 1 January 2027 onwards, only the new regime will apply to new acquisitions. These provisions remain subject to the adoption of the law.
Declaring your rental income step by step
To declare your rental income, you can rely on our partner taxx.lu, Luxembourg’s online tax filing platform.
- Gather your supporting documents (loan interest statements, maintenance invoices, insurance premiums). The AutoScan feature on taxx.lu imports your documents and pre-fills your information; always check the figures entered.
- Enter your property details in Appendix 190, dedicated to rental income. For each property, you indicate the rent received and all deductible expenses.
- Let the guided process calculate your net income and identify available deductions. The Opti-Score tool suggests actions that could help optimise your future tax returns.
- View your estimated tax result in real time. Please note that this is only an estimate; the final assessment is determined by the Luxembourg Inland Revenue (ACD).
- Have your tax return reviewed by a taxx.lu expert (Plus package) or benefit from additional telephone advice (Premium package). Payment is only required at the time of submission.
- Once you receive your tax assessment notice, you may request a review if the amount determined by the ACD differs from the estimate.
Good to know
As a Foyer customer, you benefit from a 30% discount on taxx.lu services. Appendix 190 for rental income is available as an optional add-on for €59 regardless of the package selected.
Protecting your rental income
Even with a careful tenant selection process, no landlord is completely protected against unpaid rent. Unpaid Rent guarantee insurance covers up to 12 months of unpaid rent (including service charges), as well as property damage identified during the inventory check, up to the equivalent of 6 months’ rent. It also covers legal expenses and court costs. This cover is available as an option under the mozaïk home insurance policy, but it can also be taken out independently through a separate standalone contract, offering a solution tailored to every landlord’s needs.
If the situation nevertheless becomes difficult, our article “Unpaid rent: what should I do if my tenant does not pay the rent?” explains, step by step, the legal remedies available in Luxembourg.
Frequently Asked Questions
Do I need to declare my rental income if my property costs me more than it generates?
Yes. In many cases it is even beneficial to do so, as a negative net rental income can reduce your overall taxable income.
Can I deduct the insurance premiums for my rental property?
Yes. Insurance premiums covering a rented property are deductible expenses.
Where do I declare my rental income?
In Appendix 190 of your tax return, which converts your gross rental income into taxable net rental income.
Are minor repairs and renovation works deducted in the same way?
No. Routine maintenance is deductible in the year of payment, whereas improvement works must be deducted progressively through depreciation.
Want to let your property with complete peace of mind? Discover the protections available with mozaïk and speak to your Foyer agent, who can help tailor your cover to your property. For your tax return, taxx.lu is there to support you.
