Gains

Gains

Gains

Gains on the IRS: What to take into account

Do you know how to declare capital gains to the IRS, if you are exempt or what expenses you can deduct? So you should not neglect to read the next lines.

Have you sold your house and managed to profit from it? So that profit has to be mentioned in your IRS statement and will be subject to tax because it is an asset. In addition to property gains, which result from profits from real estate, financial investments and gains from financial investments can also generate gains in the IRS.

HOW TO DECLARE ADDED VALUES TO THE IRS?

Capital gains on the IRS are declared in annex G and G1, taxable capital gains and untaxed capital gains, respectively.

PREDIAL VALUES

The sale of a property must be declared in annex G and taxed at 50% of its value and the value to be declared as capital gain must result from the application of the following formula:

   - Sale value - (purchase value x devaluation coefficient) - charges required for sale and purchase - charges for valuation (in the last 5 years).
In relation to charges, expenses related to the valuation of the property, made in the last 12 years, are considered.

ADDED VALUES RESULTING FROM FINANCIAL APPLICATIONS

Capital gains on financial investments resulting, for example, from stock trading must also be declared in Annex G and will be taxed at the 28% tax rate if you choose autonomous taxation.

The tax authority gives taxpayers the option of choosing whether they want the said capital gains to be taxed autonomously, or whether, on the contrary, they prefer to opt for aggregation. In other words, in this case, it will be as if the taxpayer has only a single category of income and these capital gains will be part of the same “pie” to which a tax rate corresponding to the step in which the taxable income of the taxpayer is located will be applied. taxpayer.

WHAT HAPPENS IF I HAVE LESS VALUE?

In the case of obtaining not a gain but a loss with a financial investment, the aggregation can be useful as it allows to deduct the capital gains that it may obtain in the following two years.

For that, it will be necessary to include all income from financial investments. It cannot, for example, include only capital gains arising from stock trading, it must also include income from investment funds, bonds and time deposits, and authorize AT to access its bank accounts.

EXEMPTIONS FROM TAXATION OF Gains on IRS

There may be situations in which the capital gains obtained are exempt from taxation, but not from declaration, and they must be declared in annex G1 - intended for untaxed capital gains. And in what situations?

   - If the property sold that gave rise to the capital gain was purchased before January 1, 1989, that is, on a date prior to the IRS Code.
   - If the amount obtained from the sale of the property for own and permanent housing is spent on construction, acquisition or works in a new own and permanent housing. In order not to see your capital gain taxed, this expense will have to be made within 36 months of the sale that gave rise to the capital gain or in the 24 months prior to the purchase. The use of bank loans does not count as a form of reinvestment, since this reinvestment requires the use of own resources;

If the reinvestment of the capital gain is partial, the capital gain initially obtained will also be partially taxed in proportion to the reinvestment, through the application of the following formula:

   - Capital gains subject to tax = Total capital gains x (1 - amount reinvested through own resources / value that could be reinvested through own resources).

DEDUCTIBLE EXPENSES

In the case of real estate, something that can significantly contribute to reducing the tax payable on capital gains is the deduction of a set of expenses related, for example, to property maintenance works.

In addition to the expenses with maintenance works, the following expenses can also be deducted from the IRS:

   - Request for Energy Certification;
   - Commission paid to real estate;
   - Municipal Tax on Transfer of Real Estate;
   -  Stamp duty;
   - Solicitation costs, deed.

After deducting expenses with the sale process of your property, and determining the amount payable to Finance, you will have the real value of the profit you obtained from the sale of your home and only in this way will you be able to ascertain the exact value you gained from selling a property. Do not forget to indicate these expenses.

VALUES OF HERITAGE

Imagine that you inherited a property valued at 100 thousand euros and managed to sell it for 150 thousand euros. In this case, you will obtain a capital gain of 50 thousand euros. If the property in question is not related to the heir's own permanent residence, there are no exemptions and the surplus value will have to be declared and taxed as in other similar situations, that is, half of the gains obtained with the sale of the property is subject to taxation.

As it is an inheritance, the amount to be considered as the acquisition value in the calculation of the capital gain must be that which, on the acquisition date, served as the basis for the settlement of the Stamp Duty. The monetary devaluation coefficients should also be applied to this amount, in addition to the costs incurred with the valuation of the property and all expenses related to its sale, such as notaries, registration and taxes on the property.