How is the capital gains tax calculated when selling a house?
December 27, 2022 | 50,00 EUR | answered by Mia Pilz
Dear tax consultant,
my name is Gerald Schröder and I am about to sell my house. Since it is my only property, I am unsure about how the capital gains tax will be calculated in my case.
The situation is as follows: I purchased the house five years ago and now want to sell it for personal reasons. Over the past few years, I have carried out some renovations to increase the value of the property. The current selling price is significantly higher than the purchase price, so I expect to make a profit.
My concerns mainly revolve around how much the capital gains tax will be and whether I have to pay taxes on the entire selling price or just the profit. I have heard that there are various tax-free allowances and regulations that I may be able to take advantage of, but I am unsure how these are applied.
Could you please explain to me how the capital gains tax is calculated when selling a house and if there are ways to save on taxes? Are there specific deadlines or requirements that I need to consider? I would greatly appreciate it if you could help me with this matter, as I am not knowledgeable in tax matters.
Thank you in advance for your assistance.
Best regards,
Gerald Schröder
Dear Mr. Schröder,
Thank you for your inquiry regarding the capital gains tax on the sale of your property. I would be happy to explain to you how the capital gains tax is calculated and what options there are to save on taxes.
The capital gains tax is a tax imposed on profits from private sales of land and real estate. It is important to know that the sale of a property used for personal residence is usually tax-free. In your case, since this is your only property and you have lived in it yourself, you should not have to pay any capital gains tax.
The renovations you have made to the property may potentially be added to the acquisition or production costs. This could reduce the profit made from the sale and therefore the tax liability. It is advisable to keep all receipts and invoices for the renovations in order to present them if necessary.
However, if you sell the property within ten years of purchase, the capital gains tax may apply. In this case, the profit made from the sale will be taxed. There are various exemptions and regulations that can be applied to reduce the tax burden.
It is important to note that the exact regulations regarding the capital gains tax depend on various factors and it is advisable to seek individual advice. I recommend consulting with a tax advisor to analyze your personal situation and potentially find ways to save on taxes.
I hope this information is helpful and I am available to answer any further questions you may have.
Best regards,
Mia Pilz
