Payment of real estate capital gains: rules and exceptions
The general rule, taking into account the changes in the law brought about by the 2021 State Budget, is that you do not pay real estate capital gains if you reinvest the amount in the purchase of another home. But keep in mind that there are other conditions to be fulfilled.
One of them is that the new house is intended for own and permanent housing of the person who acquired it or his household. And this house must be the taxpayer’s tax residence.
Attention to deadlines
To benefit from this exemption, deadlines must also be taken into account.
After selling the house, you have 36 months to acquire, without recourse to credit, another property or land for the construction of a house. You can also reinvest the sale price in the construction, expansion or improvement of another property.
If you bought a house before selling the old one, you have 24 months to inform the Tax Authority (AT) that he will invest what he earned to pay for the property he had acquired.
Other cases of exemptions
Pensioners or people over 65 years of age benefit from exemption even if they do not invest the sale price in a property. But they will have to invest that money in a financial life insurance, in an open pension fund with regular periodic income, in retirement certificates or other contributions to a public capitalization scheme.
This reinvestment must be made within six months of the sale and applies to both the taxpayer and the spouse. It is mandatory to keep this application for 10 years.
Another exemption applies to the sale of real estate purchased before January 1, 1989, the date the IRS Code went into effect. Even so, you must declare this sale to the IRS (Table 5 in Annex G1) and indicate the year of purchase as being prior to 1989.
Did you have state support in the works? Pay attention
If you received public support for the purchase, reconstruction or carrying out conservation works and if the amount of support was greater than 30% of the Tributary Asset Value (VPT) for IMI purposes, be careful. You can lose all or part of the exemption if you sell the house before 10 years have passed.
Real Estate in Local Accommodation: what changed in 2021
The 2021 State Budget brought changes to property gains related to houses operated under the AL (Local Accommodation) regime.
The idea is to stop penalizing, at the fiscal level, those who remove properties from this regime. In this way, the capital gains exemption ceases to depend on the placement of the house in the housing lease for a period of five years.
Thus, if a property that was in AL becomes private property, the capital gains from a possible sale are taxed as follows:
- If the sale takes place before three years have elapsed since the transfer: taxation as business and professional income (Category B), ie at 100%;
- If three years have passed: the gains obtained are taxed as capital gains (Category G) and levied at 50%.
