Tax from capital gains. Sale of untappable property
The State Revenue Service continues to carry out an ongoing audit of individuals who, when selling real estate, do not declare it or do not pay the tax amounts that persons should pay.
It is necessary to know that when selling real estate, it is necessary to consider the need to pay tax on capital gains.
Section 9, Paragraph one, Clause 33 of the Law On Personal Income Tax provides that the annual taxable income is not included and the tax does not include income from the alienation of immovable property, which in the property of the payer (from the date on which the relevant immovable property is registered in the Land Register) is for more than 60 months and at least 12 consecutive months (in the referred to 60) (in the period of months) until the date of entering into the alienation agreement there shall be the declared place of residence of the person (which has not been declared as the additional address of the payer
In particular, one option allowed by law is the possibility of not paying tax on the sale of immovable property, if it has been owned by a person for more than 60 months and for at least 12 consecutive months, the immovable property has been the declared place of residence of the person.
The reason why the SRS carries out tax records due to the sale of real estate is that, on the basis of the information provided by the Land Register, it appears that the person has sold the property that has been owned for less than 60 months and has been the declared place of residence of the person for less than 12 months.
In performing the audit, the SRS takes into account only the information provided by the Land Register and regarding the date of acquisition of real estate, the SRS considers the day when the property has been registered in the Land Register. This position is imposed on individuals subject to audits and data compliance checks, which means that individuals do not know and do not allow the possibility that there are alternative evidence of ownership.
In case law, the last few years are recognised that the date of purchase of real estate is not always considered to be the day when property rights to real estate are registered in the Land Register, there are alternative options confirming property rights. For example, a person has inherited an immovable property for several years before it was entered in the Land Register on behalf of the hereditary and has lived in the inherited property since the date of the succession. There are many examples of the same, but the ordinary citizen does not investigate the case-law or know that there are other approaches to solving problems with tax from capital gains. Unfortunately, the SRS does not provide such opportunities for audits and data compliance checks without informing the individuals about current case law.