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Reinvestment of Capital Gains

Capital gains from the sale of a property intended for own and permanent residence may, in certain cases, be excluded from taxation. Find out how.

How to reinvest capital gains and avoid taxes?

The reinvestment of capital gains for tax exemption purposes is only possible if you have sold a property intended for your own permanent residence. If this condition is met, you can use the capital gains resulting from the sale of the property to reinvest in another property with the same purpose or in a plot of land to build a house, which is also intended for permanent. However, take into consideration the deadlines that must be respected. You can reinvest the capital gains in the purchase of a new property up to 36 months after the sale or at most 24 months before the sale, according to article 10 of the IRS Code.

Another form of reinvestment is related to the improvement or enlargement of another property, with the condition that the taxpayer requests the registration of the property or the alterations in the land registry no later than 48 months after the date of completion.

Reinvestment of capital gains for taxpayers of retirement age

For taxpayers who are retired or over the age 65, the value can be reinvested in the purchase of an insurance contract, in an individual membership of an open pension fund, or in contributing to a public capitalization plan.

How much needs to be reinvested in order to be exempt from paying taxes?

To be exempted from paying capital gains tax, you must reinvest to the entire amount obtained with the sale of your property.

If you are thinking of selling your property and would like more detailed information on this topic, please contact us.