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Capital gain on property sale

Capital gain on property sale

The term capital gain indicates the difference between the purchase price of a property and the sale price when a speculative transaction takes place and is subject to taxation.
Those who carry out this activity by profession (such as construction companies) are excluded from this burden, who are subject to invoicing and VAT to pay taxes on the sale of a property.

However, the tax authorities have drawn up guidelines to explain to private individuals and therefore to establish who is actually subject to this particular taxation. In fact, not everyone has to pay for it.

As indicated on the website of the Revenue Agency “The provision concerns the capital gains made for the transfers for consideration of real estate (buildings and agricultural land) purchased, built or received as a donation for no more than five years. In the latter case, the five-year period starts from the date of purchase by the donor. ”
This means that sales of a property purchased for more than 5 years are excluded from taxation. To exclude speculation also the residence of the owner. That is, if the house has been used as a main residence, the capital gain tax is not due.

The capital gain falls under the category “miscellaneous income”. It is applied on the gain, or on the difference between the value of the property at the time of purchase and that at the time of sale. It is possible to opt for 2 types of taxation: ordinary taxation for personal income tax purposes (therefore it is cumulated with other income) and that of separate taxation to be done with the notary. Which is worthwhile? It depends on the individual cases. The capital gain must be taxed according to the rates provided for the various income tax brackets which start from 23%. Alternatively, at the time of the transfer (at the time of the deed) it is possible to apply a substitute tax of 26% on the capital gain. This charge is paid by the owner / seller to the notary, who will then pay the amount due. Attention, because 26% was introduced since the last fiscal maneuver and has been in force since January 1, 2020. Before it was less expensive: 20%.

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