Income tax on the sale of a property must be declared when there is an acquisition or sale of a property. These properties can be residential or commercial, and the rules for both situations are the same. All of these transactions that generate capital gains need to be included in the Income Tax.
When referring to the income tax return on the sale of real estate, we must take into account that there are many issues involved. Being aware of all the peculiarities, any problems with the IRS will be avoided.
Do you want to know more about it? Continue your reading!
What is Income Tax on Sale of Property?
The Income Tax on the sale of a property is nothing more than a rate collected by the IRS, which is levied on the amount for which the person profited from the good sold. This percentage reaches 15% of the profit. However, many citizens have no idea how this value is calculated. Therefore, see below how the calculation is done.
How to calculate the tax amount?
Calculating the amount of Income Tax on the sale of a property may seem complicated, but it is not. Imagine that you bought a house worth R $ 200 thousand and, after making some improvements, sold the same property for R $ 250 thousand. The profit obtained in this transaction was R $ 50 thousand. Now, the formula to be used is:
IRVI = profit from transaction X rate 15%
See a practical example below!
IRVI = (250,000 – 200,000) X 15%
IRVI = 50,000 x 15/100
IRVI = R $ 7.5 thousand
In the case of this sale, the amount to be paid by the Federal Revenue is R $ 7,500.00. All of this information must be posted in the GCap – Capital Gain Calculation Program. The program aims to collect taxes on the sale of goods.
How does the Income Tax on the Sale of Property work?
How to make the declaration?
The declaration is made through the Income Tax declaration program, downloaded on the computer. Then, just detail the sale in the “Discrimination” tab. The buyer’s name and CPF , the amount and the date of the transaction must be entered in the specified fields. Then, the situation on 12/31/2019 should be zeroed, while the situation on 12/31/2018 is maintained with the values that were before.
These steps need to be followed in order for the Revenue to know whether or not you made a profit from the sale. The calculation is made by GCAP and must be carried out in the month following the sale of the property. In addition, the payment of income tax in cases of capital gain also needs to be made until the last business day of the month following the sale. Such procedure must be performed through the DARF, issued in the GCAP with code 4600.
When to declare this tax?
The Annual Income Tax Declaration has a timetable to be adhered to. The declaration of sale of real estate must be made within 30 days after the sale of the property. For example, if you sold a property on 5/1, the statement of profit must take place by 6/1, so that a fine is not applied.
Are there cases of exemption?
The answer to this question is yes, there are cases of exemption from taxes on real estate transactions. See below what these situations are:
- properties purchased before 1969;
- goods acquired between 1969 and 1988 have a rate reduction;
- reforms in which the capital gain is less than the expenses with improvement;
- only property with a value of up to R $ 400 thousand is exempt from income tax;
- property expropriated by agrarian reforms in which rural activity is subject to IR exemption;
- sale of property in foreign currency in which the profit has already been collected is exempt;
- service costs for the sale of real estate are deducted.
Finally, declaring income tax on the sale of property is mandatory for cases of property negotiations that generate profits. If you have doubts about this declaration and about how to declare the financing in the Income Tax, count on the help of companies specialized in this area. In addition to helping you declare your income tax, they can also get negative property certificates quickly.
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