Real estate capital gain is the gain you get from reselling a property at a higher price before 5 years have passed since you bought it.
If a property is purchased at €100,000 and resold at €120,000, the capital gain will be €20,000.
If you decide to sell your residency home, capital gain tax must be paid only if:
- the sale takes place before 5 years;
- the real estate unit has not been used as the principal residence of the transferor or his family members for most of the period between the purchase (or construction) and the sale.
The capital gain on the second home is applied when the property is sold at a higher price than the purchase price before 5 years have passed since the signing of the deed. In these cases, a 26% substitute tax is levied on the real estate capital gain, counted on the difference between the consideration received and the sale price of the property.
The latter must be increased by the inherent costs incurred by the buyer as: expenses for the loan, interests, notary costs, land registry taxes, mortgage, registration, any compulsory insurance policies, etc. …
Expenses incurred for the renovation, if properly registered, may also be subtracted from the capital gain calculation.