Occasional sale of real estate of individuals
CURRENTLY
The regime for the payment of income tax on the occasional sale of real estate for individuals was proposed in the Economic Development Law, which amended the Tax Regime Law. Currently, the Tax Regime Law establishes under the heading of exemptions that:
Art. 9.-Exemptions.-For purposes of determining and liquidating income tax, the following income is exclusively exempted:
14.- Those generated by the occasional sale of real estate carried out by natural persons individualsThe taxable income is calculated on the basis of the amount of the taxable income, as long as it is property intended for housing, including its accessory properties such as parking lots, warehouses and similar, and land. For the purposes of this Law, an occasional sale is considered to be that which does not correspond to the ordinary course of the taxpayer’s business or usual activities.
Additionally, the Regulations for the Application of the Organic Law of Internal Tax Regime state that this exemption applies as long as it does not exceed two transfers in the year of natural persons and real estate used for housing. The referring article mandates that:
Art. 18.- Occasional alienation of real estate – Gains generated in the occasional alienation of real estate shall not be subject to income tax. The costs, expenses and taxes incurred for this concept shall not be deductible because they are related to the generation of exempt income. For this purpose, the occasional sale of real estate shall be understood as that carried out by the financial institutions subject to the control and surveillance of the Superintendence of Banks and the Savings and Credit Cooperatives of those that have been acquired by dation in payment or adjudication in judicial auction. It shall also be understood as occasional alienation of real estate when it cannot be directly related to the economic activities of the taxpayer, or when the alienation of real estate is not directly related to the economic activities of the taxpayer. does not exceed two transfers in the yearThe guarantee trusts are exempted from this criterion, provided that the assets in guarantee and subsequently subject to disposition, The Company’s financial statements have been effectively related to the existence of financial credits. It shall be understood that real estate disposals carried out by companies and individuals who carry out, as part of their business activities, land development, urbanization, construction and purchase and sale of real estate, are not occasional, but habitual.
REFORM PROPOSAL
The bill limits this exemption for individuals for a period of five years. The reform would be as follows:
Art. 9.-Exemptions. -For purposes of income tax determination and liquidation, only the following income is exempt:
“Those generated by a sale of real estate carried out within a period of five years made within a period of five years by individuals, as long as they are furniture intended for housing, including their accessory goods such as parking lots, warehouses and similar, and land. For the purposes of this Law, an occasional alienation is considered to be that which does not correspond to the ordinary course of business or the taxpayer’s usual activities.”
In conclusion, there are different requirements that must be met in order for the income tax exemption to apply. The conditions are as follows:
- The real estate, including its accessory properties such as parking lots, warehouses, and land subject to disposal must be used for housing.
- Applies exclusively to natural persons
- The exemption applies twice a year.
Now, if the proposed law goes into effect, the conditions would be as follows:
- The real estate, including its accessory properties such as parking lots, warehouses, and land subject to disposal must be used for housing.
- Applies exclusively to natural persons
- The exemption applies once every five years
