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Exemption of taxation for real estate capital gains

The State Budget for 2019 introduced amendments to the personal income tax code (“IRS”) namely in the real estate capital gains field.

As results of the amendments, the gains deriving from the transmission of real estate allocated to self and permanent housing of the taxpayer, or his/her family unit, are excluded from taxation when the sale’s value is used to subscribe insurance contracts or single subscription to open pension funds, or when it is used as contribution for the public capitalisation system.

To benefit from this exemption must be cumulatively fulfilled the following requirements: the reinvestment must be done within the next six months following the sale’s date; if the reinvestment is used for insurance contracts or single subscription of a pension fund, these must exclusively provide to the taxpayer or his partner one periodic payment which cannot exceed the maximum annual amount of 7,5% of the invested value.

The taxpayers interested in benefit from this new regime should declare it in the annual return of the sale’s year. This benefit can be partially used if the taxpayer also intends to reinvest only part of the realized capital gain and, therefore it can be cumulated with the exemption applicable to the reinvestment for self and permanent housing.

The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.

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