Published by carratelli4 years ago

How is a capital gain realized? A capital gain on the sale of real estate occurs when a property is purchased at a certain price and then sold at a higher price within five years of purchase.

How is a capital gain realized? 

The capital gain on the sale of real estate It occurs when a property is purchased at a certain price, and is then sold at a higher price during the five years subsequent to purchase. 

 

When is the capital gain on the sale of real estate taxed?

The capital gain on the sale of real estate it is taxed in these cases:

  • -when the property is sold during the five years from purchase;
  • -when the property has not reached the seller following a succession;
  • -when the property has not been used as residence of the seller or a family member of his in the time between the purchase and the sale.
  • -when the property sold was built by the seller in the previous five years and the selling price is higher than the cost of construction.
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How is capital gain determined? 

The taxable capital gain is determined by calculating the difference between the purchase price and the sale price. This calculation can deduct from the sale price the sums paid for extraordinary maintenance, renovations, and purchase costs (notary fees and registration fees). 

Two alternative methods for paying capital gains taxes. Let's find out!

 

  • - According to the first methodology, the capital gain from the sale of real estate is included in the seller's annual income. It is therefore taxed for personal income tax purposes upon filing of the tax return.
  • -according to the second methodology, the capital gain can be subject to a substitute tax equal to 20% which is applied during the sale deed.
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What are the cases in which the capital gain does not materialize? 

The capital gain is not realized with the free transfers, so with the donation or the transfer between spouses during the separation and divorce proceedings.

Carratelli

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