Capital gains tax is put off again

Capital gains tax is put off again

Just days before it was set to expire at the end of 2017, the suspension period of the application of the provisions regarding the capital gains tax during the transfer of ownership rights of real estate was extended to end-2018.

This was one of dozens of amendments tabled in Parliament on Wednesday, with the State General Accounting Office estimating that the loss in revenues from the measure next year will amount to 24 million euros.

The law provides for the capital gains tax to be paid by the seller, while the buyer has to cover the transaction tax, which amounts to 3 percent of the value as stated in the contract (usually the taxable rate known as “objective value”).

When the tax does eventually come into force (from January 2019 at the earliest), sellers who have held their property for at least five years will not be taxed for the first 25,000 of their capital gains, while properties acquired before 1995 will be exempt from the tax altogether.

Besides the psychological blow that yet another tax would inflict on property transactions, the fact that older properties have been exempted means that the financial result for public coffers would have been limited anyway.

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