Real Estate Capital Gains: What's New?

The real estate capital gains have always generated doubts among taxpayers. Now, the government's recent proposal brings important news that everyone should be aware of. In this article, we'll explain what's changing and how it could affect your finances.

What are Real Estate Capital Gains?

Firstly, it's important to understand the concept. Real estate capital gains refer to the profit made on the sale of a property. Such a profit is the difference between the sale price and the purchase price, adjusted for any expenses. Until now, this profit has been taxed by the IRS, which can result in a significant charge.

The Current Situation

Currently, the amount of capital gains is taxed by the IRS as 50% of the profit made. For example, if the capital gains are 20,000 euros, the applicable tax would be 10,000 euros. Taxpayers need to declare this amount in Annex G of Form 3 of the personal income tax return. In particular, this rule has generated a lot of concern and a considerable financial impact for many property owners.

What's New?

The new government's proposal promises to ease this burden. As such, the big news is the exemption from IRS on property capital gains when the profit from the sale is reinvested in the purchase of a new permanent home. This measure aims to stimulate the property market and facilitate the purchase of new homes.

Retroactive Impact

What's more, the government wants this measure to have retroactive effect from 31 December 2023. This means that property transactions carried out in 2023 will be able to benefit from this exemption in the 2024 IRS. So this change is significant and could change the way taxpayers plan their property sales and acquisitions.

What should you do?

If you sold a property in 2023 or plan to sell soon, be aware. Naturally, you may need to submit replacement declarations to benefit from this new exemption. Don't forget to prepare all the necessary documentation and consult a tax specialist to ensure you are complying with all legal obligations.

Conclusion

Real estate capital gains, what's new? This question now has a promising answer with the new government's proposal. The IRS exemption on property capital gains, when reinvested in own permanent housing, can bring significant financial relief. Stay informed and consult a specialist to make the most of this news.

For more information and personalised advice, contact Serro & Andrade. We're here to help you manage your finances effectively and efficiently.