Selling property at a profit: do you pay capital gains tax?

If you are considering selling your house, you have probably already thought about the selling price. If you think you have a chance to make a nice capital gain, it's an additional advantage. But there are traps. If you sell your house within 8 or 5 years following the purchase, you may have to pay taxes on any remaining capital gain from the sale. How exactly?

 

Unbuilt land

 If you sell your land with a capital gain and the time between the purchase (deed of sale) and the sale is less than 8 years, you will pay taxes on the capital gain. If the purchase-to-sale period is less than 5 years, you will pay 33% tax on the gain (plus the local tax). If the purchase-to-sale period is between 5 and 8 years, you will pay 16.5% tax on the gain (plus the local tax). Generally, there is no capital gain tax when a property is sold eight years or more after the purchase.

The same rules apply if a building is located on the land, but its value is less than 30% of the total value (land and buildings together).

 

Buildings

If you sell your house with a capital gain and the time between the purchase and the sale (deed of sale) is less than 5 years, you will pay 16.5% tax on the gain (plus the local tax). 16.5% tax is also due if the construction of a new building begins within 5 years following the acquisition of the land and then within 5 years following the commissioning of the building.

There is no capital gain tax on the sale of the family home, that is the house in which you live with your family and where your residence is. You must have lived in the house for at least 6 months in the 12 months preceding the sale.

 

Exceptions

Properties and homes owned by minors, the mentally ill and individuals declared legally incompetent are excluded from wealth gains tax when they are sold for a profit. Additionally, if wealth gains are realized through the expropriation of a home or building's land, no wealth gains tax is imposed.

Inheritances

Finally, no taxes are imposed on properties sold for a profit following an inheritance.

Note: Inheritance tax is imposed on inheritances. If you sell the home after inheriting it and sell it for more than the value stated on the inheritance declaration, you will have to pay additional inheritance tax on the profits. This limitation applies for a maximum of two years after the submission of the inheritance declaration.

Gifts

The situation is different with gifts. The sale of real estate as a gift is subject to wealth gains tax if it is sold within 3 years of the gift deed and within 5 years (8 years for land) of the acquisition by the giver.

 

How are profits and taxes calculated?

The appraisal criterion is the difference between the selling price and the purchase price. Many factors are taken into account. Since standard 25% acquisition costs are charged (if additional costs cannot be proven), the acquisition costs are called "flat-rate acquisition costs". Renovations by a registered professional can also be charged. Additionally, the purchase price increases by 5% for each additional year between purchase and sale. Under the selling value, one understands the net value, meaning the value without the costs made for the sale such as broker's fees, advertising costs, etc.