Selling an apartment means incurring some expenses And you have to be responsible to the treasury! One of them is personal income tax, advises Helpmycash, which also explains the cases in which you’ll be exempt from paying that tax to the IRS.
Exemption to reinvest in primary residence
If you sell your usual home and use the money to buy a new habitual residence, You can be free to pay personal income tax. To do this, you must meet a series of requirements:
The house you sell must be the usual home. You must have resided there for at least three years continuously. If you do not meet this requirement, but the change of residence is made for justifiable reasons, you can also take advantage of tax benefits.
The new house should be too usual. To do so, you must physically inhabit it within twelve months of the purchase or completion of the works.
The period for which you have to reinvest is two years. These can be before and after the sale.
For the reinvestment to be complete, you must set aside all of the money from the sale (taking into account expenses) for the purchase of the new home. If there is a surplus, you can only partially benefit from the exemption.
Exemption for those over 65 years old
Those over 65 do not have to pay personal income tax on the sale of their habitual residence, regardless of whether or not they reinvest their money in another residence. On the other hand, if the home they are selling is a second residence, they will have to pay taxes on it, unless they use the money from the sale to build up a lifetime annuity subject to the following requirements:
condition. Contracting for a lifetime annuity must be completed within six months from the date of sale.
Quantity. The maximum amount that entitles his reinvestment to enjoy exemption is €240,000.
Repetition. The lease must be less than or equal to one year. In addition, it must begin receiving this within a period of one year of its constitution.
Telecommunications. You must notify the insurance company or bank that the money is the product of the sale of a home and that you intend to take advantage of the exemption.
Exemption from handing over the apartment on a payment date
If you had to turn your house in on a payment due date because you weren’t able to pay off the mortgage, you can too enjoy the exemptionalthough it is necessary that you do not have any other property in the property the amount of which is sufficient to pay off the debt in full.
In this case, to calculate whether you have a capital gain or loss, the difference between the acquisition value of the transferred apartment and its conversion value will be used. The latter is nothing more than debt value which goes off with history.