So far, in the transmissions of properties applied update coefficients that allow correcting the monetary depreciation of immovable acquired before December 31, 1994. Also in transmissions assets (shares, properties...) acquired prior to that date were also applied coefficients of gloom.
From January 2015 indexation will no longer apply which means that accumulated inflation will no longer be taken into account when calculating the capital gain made from the sale of a property. This will involve a significant increase in the burden to the taxpayer. The reform also establishes limits on inflation relief for the transfer of assets with a price of over €400,000, the effect of which we will analyse some other time in this blog.
Here is an example of how the elimination of the said inflation relief affects the sale of a property to better understand it.
|Acquisition price: €100,000||Acquisition price: €100,000|
|Indexing (2014): 1.2560||Elimination of indexing|
|Acquisition price (indexing applied):
|Net sales price: €150,000||Net sales price: €150,000|
|Capital Gain: €24,400||Capital Gain: €50,000|
Lets calculate the taxable amount (on the Capital Gain made)
|Up to €6,000: 21%||* Up to €6,000: 20%|
|€6,000 to €24,000: 25%||* €6,000 to €50,000: 22%|
|From €24,000: 27%|
The first €6,000 at 21% = €1,260 The first €6,000 at 20% = €1,200
€6,000 - €24,000 at 25% = €4,500 €6,000 - €50,000 at 22% = €9,680
€24,000 - €24,400 at 27% = €108
TOTAL TAXATION 2014€5,868
TOTAL TAXATION 2015€10,880