WHAT CAPITAL GAIN TAX IS , WHO PAYS IT AND WHERE TO PAY

Among the obligations imposed when a real estate is transferred is the settlement of the capital gains tax to the City Council.

Surely you have heard these words on many times but perhaps you have never considered what it really is. What is capital gain in the transfer of a real estate.

If you are selling, donating or inheriting a property, don´t miss this post.

WHAT CAPITAL GAIN TAX IS

It is literally the Tax on the Increase in Value of Urban Land.

For a better understanding, it is the profit obtained in the price of the sale of an property, compared to the price it was bought.

In this specific case we are going to talk about a property.   Capital Gain is the difference between the price it was purchased and the price is sold or transferred years later.

For example, if a property was purchased for €80,000 and is now sold for €120,000, the difference is €40,000.

The function of the capital gain is to tax the profit obtained, that is, over €40,000.

THE TAX

The capital gain tax levies on the profit gained, whether through sale, inheritance or donation.

It is a municipal payment to be settle at the Town Hall where the property i located.

Usually the Notary sends the transmission data to the Town Hall, in order to notify the interested party to do the payment after calculating it.

For the calculation, it will be taken into account the cadastral reference of the property, the date it was purchased and the date it is sold, transferred or donated.

WHO PAYS THE TAX

Depending on the case, the taxpayer of the tax will different:

  1. In cases with no gain, such as inheritance or donations, called free transfers the person responsible for paying is the one who acquires the property.
  2. In cases with benefit, called onerous transfers the taxpayer is the seller or transferor.

PAYMENT TERMS

In cases of sale or donation, it must be paid within a deadline of 30 days from the notification made by the Town Hall.

In case of inheritance, the deadline will be extended to 6 months.

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We hope this post on capital gains in the transfer of a property has been interesting.