What is capital gain, when does the seller of real estate pay capital gains tax and how is capital gains tax calculated?

CAPITAL GAIN represents the seller’s income from the sale of real estate. According to the Law on Personal Income Tax, the seller is obliged to pay capital gains tax at a rate of 15% on the difference between the purchase and selling price of the property.

Sellers who have owned the property that is the subject of sale for more than 10 years are not subject to capital gains tax and are exempt from this obligation. Capital gain, as you read at the beginning of the text, is the income earned from the sale of real estate, but there are several additional situations when it is not paid:

1. in the case of transferring ownership rights acquired by inheritance in the first line of succession;

2. in the case of transferring ownership rights between spouses and blood relatives in the first line as well as between spouses during divorce;

There is also the possibility that the seller of the property, which he has owned for less than 10 years, resolves his housing issue or the housing issue of family members (spouse, children, adopted children).

Additionally, the legislator has left the possibility for sellers to invest the money obtained from the sale of the property within an extended period of up to 12 months in resolving their housing issue or the housing issue of their family members. In this case, the seller is entitled to a refund of the paid capital gains tax.

HOW IS CAPITAL GAINS TAX CALCULATED?

For example, if the seller sells his property for 150,000 EUR, and he bought it 4 years ago for 100,000 EUR, the capital gains tax will be calculated on the difference between the purchase and selling price.

150,000 – 100,000= 50,000 EUR

50,000 EUR * 15%= 7,500 EUR

The capital gains tax of 15% will be calculated on the difference of 50,000 EUR, which amounts to 7,500 EUR

How can the seller be exempt from this obligation? If, after the sale, within 90 days (3 months), he invests the money obtained from the sale of the property in the purchase of another property.