Have you sold a property and will have to pay capital gains tax? Find out what expenses you should consider when calculating the capital gains from the sale of your home.
Capital gains are calculated by taking the difference between the sale price of the property and the purchase price, multiplied by the currency devaluation coefficient. From this amount, you can deduct the costs incurred in the sale process, as well as any expenses incurred in increasing the value of the property, such as improvement works.
What is the amount subject to taxation?
The amount subject to taxation corresponds to 50% of the calculated capital gains. The sale details must be entered in Annex G (Form 3) of the seller's income tax return.
In this same field, in addition to the data corresponding to the sale of the property, you must also include all the expenses you incurred in this transaction, namely expenses with deeds or home improvements. By declaring these, you are reducing the value of the capital gains, so you will also be reducing the tax you will have to pay on the profit you made when selling your home.
All expenses that you should take into account when calculating the capital gains from the sale of your property.
Maintenance Work
This is the type of expense you should deduct on your IRS tax return, along with the other details of the property sale. If you carried out work to maintain or improve your home in order to increase its value at the time of sale, you must declare all invoices on your IRS tax return. If you invested money in home improvements, your profit has decreased and this should be reflected in your tax return.
Energy Certification Request
The energy certificate is mandatory for all buildings that are put up for sale, regardless of their age. This is a document that assesses the energy efficiency of the property and is presented when the purchase and sale contract is signed.
Commission paid to the real estate agency
If you choose to sell your property through a real estate agency, they will charge you a commission on the sale. This expense can also be deducted from your income tax, along with the other expenses associated with the sale of the house.
Municipal Tax on Onerous Transfer of Real Estate
This is a tax that aims to tax transfers of property rights on real estate, IMT. It is levied on the taxable value of the property, or the value established in the contract or deed, whichever is higher. On the portal for real estate professionals and companies in Portugal, you can simulate the amount of IMT you will have to pay.
Stamp duty
This is the oldest tax in the Portuguese tax system and is levied on acts, contracts, documents, securities, books, papers, and other items listed in the General Table that have occurred in Portugal and are exempt from VAT.
Solicitor's fees
The solicitor's fees are charged by the solicitor who accompanies the process (the solicitor is usually appointed/recommended by the bank) to ensure that the records, documents, and deeds are in order. The costs vary for each solicitor.
Deed
This is an expense that you can include in your IRS as an expense related to the purchase and sale of the property. There is no fixed amount and it depends on the fees charged by each notary. As a rough guide, a purchase of €100,000, including deeds and registrations, could cost around €450.
Tax amount – Attention!
To calculate the actual profit obtained from the sale of your property, you must take into account the amount you will have to pay in taxes. In other words, after deducting the expenses involved in the sale of your property and calculating the amount payable to the tax authorities, you will have the actual profit you made from the sale of your home.
To find out the exact amount you earned from the sale of a property, don't forget to include these expenses.
Source: doutorfinanças