Capital gains

11 May 2022
Capital gains

When we sell our house, the goal is to buy another, however the sale and purchase of another property has tax payments.

But what are real estate capital gains anyway?

The Capital Gains are equivalent to the tax levied by the state, referring to the difference between the sale value of one property and the value of the acquisition of another.

The transaction of the sale generates capital gains for the seller, which is equivalent to the profit that he earns in the process.

However, you can deduct expenses that were associated with the sale and purchase process, such as:

- Energy Certificate

- Land Registry and the resulting taxes

- Stamp Duty (IS) 

- Municipal Tax on Onerous Real Estate Transmission (IMT) (in case of non-exemption)

- Deed Costs

- Commission pays to the Real Estate Agency (if there is real estate mediation)

 

By declaring these expenses related to the sale and purchase of the property, you can reduce the amount of tax payable or even be exempt.

One of the options to be exempt from paying capital gains is to reinvest the value of the house you sold (if this was own and permanent housing), in another dwelling with the same purpose, on land for the construction of property, or in the construction, expansion or improvement of another property exclusively with the same destination.

If you reinvest in a property in need of works, it is only considered either the value of the acquisition or the value of the works.

Attention to the deadlines to reinvest the money, are 24 months prior to the sale of the property and 36 months later.  

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