Real Estate Capital Gains: How to Reduce Tax with Works
Real estate capital gains is taxed at 36.2% (19% income tax + 17.2% social contributions). To reduce tax, you can deduct your works: 1) Real deduction (invoices) or 2) 15% flat-rate of purchase price (without justifications). Our optimizer calculates the most advantageous strategy.
💡 The 2 Works Deduction Strategies
1️⃣ Real Deduction (Invoices Mandatory)
Advantage: Unlimited deduction if you have invoices. Deductible works: Construction, extension, improvement (equipped kitchen, modern bathroom), renovation (electricity, plumbing, insulation), energy performance (heat pump, VMC). Disadvantage: Seller-named invoices mandatory. Routine maintenance (paint, minor repairs) not deductible.
2️⃣ 15% Flat-Rate (No Justifications)
Advantage: Automatic, no invoices required. Deduction = 15% of purchase price. Example: Purchase 200,000€ → 30,000€ deduction. Disadvantage: Capped at 15%, even if actual works higher. Strategy: Compare both options and choose most advantageous.
📋 FAQ: Real Estate Capital Gains Optimization
What works are deductible from capital gains?
100% deductible: Construction/extension, improvement (equipped kitchen, modern bathroom, central heating), renovation (electricity, plumbing, insulation, roofing), energy performance (heat pump, VMC, solar panels). Not deductible: Routine maintenance (paint, minor repairs), decoration, embellishment. Condition: Seller-named invoices mandatory.
15% flat-rate or real deduction: which to choose?
Choose 15% flat-rate if: No invoices, works under 15% of purchase price, routine maintenance only. Choose real deduction if: Invoices available, works over 15% of purchase price, significant improvement/renovation works. Example: Purchase 200,000€, works 50,000€ → Flat-rate = 30,000€, Real = 50,000€ → Choose Real (tax saving +7,240€).
How to calculate holding period allowance?
Income tax (IR): 6% per year from 6th to 21st year + 4% 22nd year = total exemption after 22 years. Social contributions (PS): 1.65% per year from 6th to 21st year + 9% per year from 22nd to 30th year = total exemption after 30 years. Example: 15-year holding → IR allowance = 54% (9 years × 6%), PS = 14.85% (9 years × 1.65%).
What's the real estate capital gains tax rate?
Total rate: 36.2% = 19% income tax + 17.2% social contributions. Example: Taxable capital gain 100,000€ → Tax = 36,200€. Possible reduction: Works deduction + holding period allowance. Exemptions: Main residence (100%), holding over 22 years (IR) or 30 years (PS).
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