Taxation for properties gifted beyond the first and second heirs will be calculated according to the purchase price

The 15% taxation on immovable properties donated beyond the first and second heirs will be calculated according to the purchase price. The instruction for the implementation of the law "On income tax" determines that in the case of immovable property that has been acquired by inheritance or donation, or relinquishment of ownership, the purchase price for tax purposes is the taxable value of the donated or inherited property. at the time of receipt determined according to the practices in force.

"This value is applied in cases where the subsequent transaction after the inheritance / donation / relinquishment, essentially has the nature of donation / inheritance / relinquishment, and there is a legal deed of inheritance / donation / relinquishment for the legal beneficiaries, according to articles 361 and 363 of the Civil Code. In any case or form of alienation otherwise than above, the purchase price will be equal to the amount that the beneficiary paid in that transaction, and if he did not pay due to the legal exemption from tax, that amount will be zero".

The new income tax law exempts the taxation of immovable properties gifted to first and second heirs. For properties inherited or gifted to heirs beyond the first and second order defined in the Civil Code, the property will be taxed at 15% calculated on the purchase price. But, according to the new law, properties donated beyond the first and second heirs are not taxed for their value from 1 to 5 million ALL.

For accountants, the imposition of a band-aid tax on assets, after the first and second generation of heirs, is a practice that is also followed by some European countries.

Article 60 of the Law "On Income Tax"

Inheritance, gift and gambling tax

Inheritance pursuant to this article includes movable or immovable property or money acquired as a result of the transfer due to death from the deceased person to their heirs, after deducting heritable obligations.

Exempted from tax:

a) donations and inheritance received from/or between legal heirs in the first place (Article 360 ??Civil Code) and second, according to Articles 361 to 363 of the Civil Code, as well as donations and inheritance within the gender relationship of sister-brother;

b) donations and inheritances received other than those specified in letter "a" up to 5,000,000 ALL for taxpayers for immovable assets and up to 1,000,000 ALL for movable assets for taxpayers;

c) the transfer of the right of ownership to the legal heirs according to articles 361 to 363 of the Civil Code, namely through donation and/or relinquishment of property, when the property derives from the compulsory co-ownership acquired on the basis of law no. 7501, dated 19.7.1991, "On land", amended.

Guideline

Taxable investment income for alienation of real estate

17.1 The procedures for calculating income, costs and profits, according to cases and sub-cases, in relation to capital gains related to the alienation of real estate by individuals, are clarified in the instructions of the Minister responsible for Finance and the heads of the State Cadastre Agency.

17.2 In the case of immovable property that was acquired by inheritance or donation, or relinquishment of ownership, the purchase price for tax purposes is the taxable value of the donated or inherited property at the time of receipt determined according to the practices in force.

This value is applied in cases where the subsequent transaction after the inheritance / donation / relinquishment, essentially has the nature of donation / inheritance / relinquishment, and there is a legal deed of inheritance / donation / relinquishment for the legal beneficiaries, according to articles 361 and 363 of Civil Code. In any case or form of alienation otherwise than above, the purchase price will be equal to the amount paid by the beneficiary in that transaction, and if he did not pay due to the legal exemption from tax, that amount will be zero. /Monitor