Real estate news

When selling a property at a price higher than the purchase price, a capital gain is realized, which is taxable: let's see what terms.

The capital gain in the sale of real estate is realized when a property is purchased at a given price, and is then sold at a higher price in the five years following the purchase. In these cases, the capital gain in the sale of real estate is taxable, because it is assumed that the sale was intended to enrich the seller. Let's see in detail when the capital gain in the sale of real estate is subject to taxation.

When you tax the capital gain in the sale of real estate

The capital gain in the sale of real estate must be taxed in these cases [1]:

when the property sold has been purchased for less than five years;

when the building has not reached the seller following a succession;

when the property has not been used as the residence of the seller or his family member in the time elapsed between the purchase and sale which realized the capital gain.

In these cases, the capital gain in the sale of real estate is always subject to taxation.

The capital gain is taxable even when the good sold has reached the seller by virtue of a donation.

The capital gain is taxable even when selling a property that was built by the seller in the previous five years, if the sale price is higher than the cost of construction.

In fact, the taxable capital gain is determined by making a difference between the purchase price or the cost of construction on the one hand, and the selling price on the other [2].

For the purposes of determining the taxable capital gain, the amounts paid for extraordinary maintenance and restructuring and purchase costs, such as notarial and registration of the deed, can be deducted from the sales price.

Taxation on the capital gain in the sale of real estate can be paid in two alternative ways:

according to the first method, the capital gain from the sale of real estate flows into the total annual income of the seller, and will therefore be taxed for income tax purposes upon the declaration of income with application of the ordinary rates;

according to the other method, the capital gain from the sale of properties may be subject to a substitute tax equal to 20% applied directly at the time of the deed of sale: in this case it will be the notary who will collect the substitute tax and then pay it to the State.