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As in the sale of a property acquired by you, when selling a property from an inheritance you also have to pay capital gains real estate. 

If real estate capital gains are calculated in the same way as when we sell a property of ours, then how can we know the value of the home inherited, how to declare in the IRS?  To end your doubts about capital gains in the sale of inherited properties, the lawyer Natacha Branquinho of CRS Advogados answers some of these questions that may be arising.

What is the difference between the calculation of capital gains on the sale of own properties and inherited properties?

According to the lawyer, in terms of calculating the capital gains we use the criteria of capital gains of own properties. That is, only in case of sale of the house in which capital gains are found is that there is payment of IRS.

Therefore, in order to calculate the capital gains of inherited properties, as well as in the calculation of the capital gains of own properties, the following formula applies:

• Value of the sale of the property - Acquisition value (to which a monetary correction factor can be applied) +Charges with the valuation of assets (of the last 12 years) = Value of real estate capital gains.

Real estate capital gains in the case of inheritance: What is the taxed amount?

As in the sale of properties acquired by you, in the case of the inheritance of a property, the amount subject to taxation is also 50% of the capital gain. This amount is added to the remaining income to determine the IRS rate payable.

What is included in the charges\expenses?

The charges and expenses to be deducted include: recovery works (of the last 12 years), taxes and registration fees (if any), payments for real estate mediation, costs of obtaining energy certificates, among others. Natacha warns that the burdens have to be proven. 

How do I know the purchase value of the inherited house?

The acquisition value is classified as considered for the purposes of the assessment of stamp duty or that would serve as the basis for this (Tax Asset Value (VPT) of the property).
 

When you inherit a part of the property and want to sell, how do you calculate the value of the real estate capital gains?

The amount takes into account the Tax Asset Value (VPT) at the time of the acquisition (in proportion to its share) to which it has to be deducted from the sale value, Natacha explains. That is, when aware of the acquisition value, you only have to do the subtract mentioned earlier in the topic of capital gains calculation. 

In what situations is there exclusion from capital gains taxation? 

The exclusion of capital gains taxation applies to the same criteria. That is, it is excluded from the taxation of capital gains tax in cases of:

• Real estate acquired before 1989, the year in which the IRS Code came into force.
• Over 65 years or pensioners who invest capital gains (from the sale of a property intended for own and permanent housing)   in a life insurance contract, individual support to an open pension fund or contributions to the public capitalisation scheme. This reinvestment must be carried out during the six months following the date of sale.
• People who have sold their own permanent housing (from the taxpayer or his household) and the value of the sale is reinvested in a new property for own and permanent housing, in its construction or rehabilitation. This within 36 months of sale or 24 months prior to sale.

In conclusion, Natacha, of CRS lawyers, explains that the exclusion of taxation applies:

• If the entire property has already been inherited by a person, it affects its own permanent dwelling; 
• If there is a reinvestment of the realization value.  

If the reinvestment is partial, the respective exclusion is only applied to the proportional part of the sales value corresponding to the reinvested amount.

How to declare the sale of a property inherited in the IRS?

N as regards the sale of the property there may be two situations that are necessary to distinguish in the IRS declaration:

1. If part of the property is inherited before 1989
2. If another part of the inherited property occurred just after this date.

You will need to fill in the IRS declaration annex G1 for the acquisition prior to 1989 and Annex G for the acquisition after this date, in proportion to the acquisition.

In Idealista News, 25 March 2022