The concept of capital gains corresponds to the positive difference between the disposal price of a good or product and the price of its acquisition. Conversely, if the sale resulted in loss, then we are facing a situation of less value.

Capital gains may relate to real property, such as real estate, and financial instruments, such as shares or bonds, and the tax treatment will vary according to the type of asset.

Properties

The sale of a property can originate income subject to IRS, when there is an added value, the difference between the purchase price which had to cover to have the property of the good, and the price at which you could sell the same good. The taxable profit is considered to be only 50% of its value.

“As an example, let´s assume that you acquire a property for 100 thousand euros, and you sell it for 150 thousand euros. It had an added value of 50 thousand euros. Seen superficially, this value corresponds to the amount you earned from the sale of the property. Apparently, a good deal.”

 

  • Formula to calculate capital gain or loss:

Sale value (purchase price x devaluation coefficient) charges for sale and purchase charges for recovery (last 5 years). If you choose not to reinvest in the capital gain, half of its value will be included in other income.

IRS Exemptions

If the property sold was purchased before January 1, 1989, the capital gain will not be subject to IRS, but the data on the sale of the property must be placed on the seller’s income statement.

Also exempt from IRS is the capital gain from the sale of own permanent residence if the value of the sale has been (or is) spent on the acquisition, construction or works of new permanent housing:

  1. Within 36 months of the sale;

 

  1. Within 24 months prior to purchase.

 

  • Post taxes, documentation and other expenses

To realize what your profit in this business, you cannot forget to count the expenses associated with the operation, to deduct the costs incurred with the valuation of the property in the last five years, such as:

  1. Deed – at the time of purchase of the property and transfer to your name of the purchase of the house now sold;

 

 

  1. IMT – or Municipal Tax on the Real Estate Transfer, of the house sold. The percentage of taxation varies between 2% and 8%, and up to € 92,407.00 is not calculated;

 

  • Stamp Tax – state tax on various operations exempt from IVA. The tax is 0.8% and will be levied on the value of the Contract or on the value of property tax (VPT) of real estate, whichever is greater;

2. Expenditure on real estate mediation;

3. Cost of energy certificate

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