As you know, until December 31, 2024, the profit received as a result of the sale of property by an individual is not subject to taxation. The application of the relevant provision of Article 41 of the Tax Code (TCC), which provides for the taxation of the said capital gain at a rate of 15%, has been repeatedly suspended (already since 2014, when it was first introduced). time) so as not to affect the real estate market.

However, individual taxpayers should be aware that profits made from the sale of property (land, apartment, land, etc.) may be subject to high taxes if the sale is considered a “business”. activities” “, on the basis of Article 21 part 3 of the Law on the Civil Code. The recent circular E.2031/2023 contains important clarifications on this issue. Especially:

The said provision stipulates that each individual act through which a transaction is carried out, as well as the systematic performance of actions for the purpose of making a profit, is considered a “business transaction”. Consequently, the resulting profit is taxed on the scale of article 15 of the Tax Code in the amount of any income of the taxpayer from wages and pensions, i.e. at a rate of 44% if the profit exceeds EUR 40,000.

The “profit purpose” must be present at the time of the acquisition of the thing (eg purchase, construction of a building) that is the subject of the transaction in question. Each case must be considered on the basis of the facts and the existence of a profit intent must be sufficiently inferred from the general circumstances in which the transactions are carried out, since the burden of proof is in principle on the tax authority. power. These conditions are, indicatively, the sale within a short period of time from the date of purchase and in combination with the amount of the price reached, in the case of the construction of a building, the ratio of apartments sold to those built and the time elapsed from the moment of construction to the sale, purchase of real estate from auctions and its sale, etc. On the contrary, it is not considered that the purpose of making a profit exists in the case of the sale of immovable property that was acquired for the purpose of capitalization (for example, renting out, using it for ownership, commercial use for personal purposes, etc.) . ) and the sale is due to other reasons that the seller can show and prove.

It is expressly provided that in the case of real estate transactions, it is assumed that every three similar transactions made within two years represent a systematic performance of actions, i.e. a commercial transaction.

Especially for real estate, the date of signing the first definitive contract is considered the starting point for calculating the two-year period. Real estate sold under a contract to the same buyer is understood as one transaction, regardless of the number of objects. Similarly, the sale of several properties to the same buyer on the same day, but under different contracts, is considered one transaction. Conversely, properties sold under different contracts to the same buyer at different times are considered different transactions based on the number of contracts, not the number of properties.

Profit from each transaction must be reflected in the income tax return for the year in which it was carried out, and indicated in codes 427-428 “Income from entrepreneurial activity, paragraph 3 of Art. 21 of the Tax Code of the Russian Federation” on the income of individuals. tax return (Form E1). If the critical period of two years has expired in another tax year and the deadline for filing an income tax return for that year has passed, corrective returns are filed.

The aforementioned circular also clarified that, starting from the 2019 tax year, a single act of transferring property for profit is not a business transaction. In exceptional cases, when determining income from entrepreneurial activity, an act of sale by an individual of property (or property) received by inheritance or as a gift from relatives up to the second degree of kinship or owned for a longer time is recognized. period of time does not count as five years from the date of acquisition, as indicated by the relevant document (e.g. legal document, contract, etc.). This exclusion is based on the fact that in these cases it is not considered that there is a profit objective, either because of the way the asset was acquired or because of the period of time it was held.

Ms. Jeni Panu is the head of the tax department of Accounting Solutions SA (www.asnetwork.gr).