Transfer of immovable property

When selling or exchanging land, house or apartment, the question arises – whether income tax is payable on the gains received. If so, how and when to declare the gains and how the tax amount is calculated. You can find answers to these questions in the following guide.

Handbook

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Transfer of property privatised with the right of pre-emption

Gains from the transfer of immovable property are not subject to income tax if the essential part of the immovable or the object of apartment ownership or the right of superficies is a dwelling and all the following three conditions are met:

  1. the dwelling has been transferred to the taxpayer’s ownership through privatisation with the right of pre-emption
  2. the land adjacent to the dwelling has been transferred to the taxpayer’s ownership through privatisation with the right of pre-emption
  3. the size of the registered immovable property does not exceed 2 hectares.

EXAMPLE
The dwelling house was inherited; 0.6 hectares of land was privatised with the right of pre-emption, and the owner did not use the house as a residence.
The total costs related to the inheritance process and improving or upgrading the dwelling were 19,670 euros.
The costs of privatising the land with the right of pre-emption were 1,800 euros. The registered immovable was sold for 70,000 euros.
Taxable income is calculated as follows: 70,000 – 19,670 – 1,800 = 48,530 euros.

Since one of the above-mentioned conditions is not met in this example (the dwelling is not privatised with the right of pre-emption), the income tax exemption cannot be applied and the income received is taxed.

Transfer of property restituted after being unlawfully expropriated if...

...the property is inherited

If a person inherits and transfers a property privatised with the right of pre-emption, he or she cannot benefit from the tax incentive and income tax is payable on the gains received, unless he or she used the property (dwelling) as his or her place of residence. Only the costs incurred by the successor are the acquisition costs of the property, which may be deducted from the taxable gains (subsection 11 of § 38 of the Income Tax Act).

...the property is received as a gift

Gifting is a transfer transaction and the tax exemption cannot be used upon transfer of property privatised with the right of pre-emption and received as a gift. If the owner of such property gives this property as a gift and the recipient of the gift transfers it, then he or she must pay income tax on the gains received.

...the property is received as a legacy

If the property privatised with the right of pre-emption has been obtained by a contract for the transfer of a legacy, it is deemed to be the first transfer transaction. If the legatee transfers the property, he or she must pay income tax on the gains received.

Last updated: 23.08.2022

Tax-exempt or taxable transaction

This table provides a quick overview of real estate transactions that are exempt from tax when certain conditions are met. For more information about the transaction you are interested in, please view the handbook.

Object of the contract of purchase and sale
Basis of tax exemption 
in the income tax act
To the subject of ownership reform /
a privatiser with the right of pre-emption /
the owneR
To a successor
To a legatee
By gift or other transfer transaction
Property returned in the course of the ownership reform § 15 (4) 5) sale is exempt from tax the tax exemption is passed on the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed
Immovable property obtained by restitution after being unlawfully expropriated and the essential part of which is a dwelling § 15 (5) 2) sale is exempt from tax


the tax exemption is passed on 

the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed
Immovable property privatised with the right of pre-emption and the essential part of which is a dwelling

§ 15 (5) 3)

The dwelling together with land belonging to it has been privatised with the right of pre-emption and the size of the registered immovable property does not exceed 2 hectares.

sale is exempt from tax the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed

Summer cottage or garden house

§ 15 (5) 4)

According to the register of construction works or the land register, the summer cottage or garden house has been in the person’s ownership for more than two years and the size of the registered immovable does not exceed 0.25 hectares.

sale is exempt from tax the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, if conditions are met, then sale is exempt from tax the tax exemption is not passed on, if conditions are met, then sale is exempt from tax

Last updated: 24.08.2022

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