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Don’t forget about Capital Gains Tax!

Property sales are slow. Prices are down. It’s a buyer’s market at the moment.

But when considering how low you can go with your selling price, you should take into account all the costs you will be incurring. Agent’s fees, lawyers fees, energy certificate if your property does not have one already and, of course, capital gains tax.

What is Capital Gains Tax?

This is a tax that is levied on the gain you make with the sale of your property. Imagine that you purchased your property 15 years ago for €200,000 and are selling it today for €300,000 – capital gains tax will be levied on the gain of €100,000 that you are making with the sale.

Can I deduct any costs?

Proven costs that have increased the value during the last five years can be deducted. Always remember to ask for receipts!

And all costs in purchasing and selling the property can also be deducted (IMT, estate agent’s fees etc.).

An indexation allowance is also applied to update the original acquisition value.

Resident v. Non-resident

For residents, the tax is charged on a sliding scale depending on your income bracket. The taxable gain is reduced by 50%.

For non-residents, the capital gain is taxed at a uniform rate of 25%. The 50% reduction should in principle also be applied to all EU residents (although this is not always the case).

Thinking of reinvesting

your gain?

If the total gain is reinvested in the acquisition of another home, own residence or building plot, capital gains tax is not payable. The reinvestment can also be partial. There is, however, a limited period during which this investment can be made.

Article supplied by law firm Neville de Rougemont. For any queries on this or any other tax matter, please email [email protected]