Capital Gains Tax on sale of property ("mais Valias&quo

[biffa]

Information received today from the tax department is that the tax authority will now allow set off of estate agents commission against a capital gain. No news yet on lawyers fees. More information when it is available.

[cereza]

Are you sure of this - do you have it in writing ?Is it a new idea? With the huge commission rates charged by estate agents this would be a massive blow for any seller. Anyway surely the gain to be taxed is what you receive.Will there be anything left to claim for ? IMT ?

[biffa]

Hi Cereza, I think you have misread what I wrote. Up until now the agents commissions were DISALLOWED against the profit as were any lawyers fees. Now the tax department have said they will ALLOW agents fees to be set off agaisnt a profit. so it is GOOD news for sellers not bad!

[omostra06]

I thought that agents fees were always deductable.

[cereza]

Sorry Biffa - I did misread your post - I read "now" as "not" !!!
Gave me an awful fright as we are completing on a sale soon!
I was always told that agents and lawyers fees were deductable as would be logical so if this is new then thank God for that!

[snowbirds]

We were advised that both legal and estate agent fees are deductible from any capital gains. Also any improvements made to the property, within a five year period before the sale is completed, can also be claimed - such as renovations/upgrades, as long as you have invoices detailing the work.

[tricky]

Is there not some rule about re-investing in another property within two years to save on capital gains tax, or is that outdated?

[omostra06]

We were advised that both legal and estate agent fees are deductible from any capital gains. Also any improvements made to the property, within a five year period before the sale is completed, can also be claimed - such as renovations/upgrades, as long as you have invoices detailing the work.

yes that is true. you must have a factura (invoice) for the building work,
once the total deductions are made, whats left is your profit, then you will be taxed on it, at 25% of the total if you are non resident and 12% if you are resident, with the abillity to reinvest within a certain time and avoid the tax for a while.

[biffa]

Hmmm omostra06 - not quite correct. Best to get advice from an accountant.

[steve]

As a resident you will be taxed at marginal rates on one half of the profit after allowances. If the taxable amount exceeds 60000euros you are looking at a tax rate of 42%

[omostra06]

50% of the profit is yours, you only get taxed on half the profit, as a non resident it works out at 25% of the total profit.

as a resident you get taxed too. however the level of tax you will pay is effected by your total income in that period.

as biffa says anyone doing their sums for cgt should always talk to an accountant to make sure they get the correct advise for their personal finances.

[Avvie]

Is it correct that if you sell your home in Portugal, to purchase another within Europe, you don't pay CGT?

[biffa]

Portugal now allows tax relief on capital gains realised on the sale of a taxpayer's permanent residence if the sale proceeds are reinvested in the purchase or construction of the taxpayer's permanent residence in another European Union or European Economic Area member state. Previously, the tax relief was available only if the sale proceeds were reinvested in Portugal.
The European Commission -- after repeatedly asking the Portuguese government since February 2003, to extend that tax relief to cases of reinvestment within other EU and EEA member states -- on September 21, 2005, brought action against Portugal before the ECJ, citing Portugal's failure to fulfill its obligations under articles 18, 39, 43, and 56(1) of the EC Treaty, and under articles 28, 31, and 40 of the EEA Agreement of May 2, 1992.
Now, more than a year later, Decree-Law 361/2007 amends articles 10(5) and 57(3) of the IRS Code, adding to its condition of reinvestment within Portuguese territory the expression "or the territory of another Member state of the European Union or of the European economic area, provided, in the last case, that there is exchange of tax information."
By making tax relief dependent on the exchange of tax information, the new law appears intent on excluding relief if the reinvestment takes place in the territory of Lichtenstein, the only EEA member state that does not have a treaty with Portugal that provides for the exchange of tax information. It also indicates that Portugal is only reluctantly complying with the ECJ judgment, as the lack of exchange of tax information was not invoked by Portugal, and was therefore not accepted by the ECJ, as a valid justification for limiting reinvestment relief to the Portuguese territory.
It has taken the European Commission almost five years to force Portugal to comply with this seemingly minor adjustment to its tax laws, but many other tax rules that contain unjustified restrictions on the fundamental freedoms under the EC Treaty (mainly by discriminating between residents and non-residents) remain in force.
(well you asked! )

[Avvie]

Thanks Biffa!

[SAM SPARKLE]

Bang goes the pied-à-terre in liechtenstein then