Tax and capital gains on a sale.

Selling a home does not always mean tax. Here’s when a capital gain may arise, and the cases where it doesn’t.

What capital gains is

Capital gains is the profit between what you paid for the home and what you sell it for. In some situations this profit can be taxed; in many others it isn’t. Understanding which case you are in, before selling, avoids surprises.

The five-year rule

The best-known principle: if you sell a property within five years of buying it at a higher price, the capital gain may be taxed. After more than five years, generally there is no taxation. It is a rule with exceptions and conditions, but it gives the idea.

First home and other cases

There are situations where, even selling within five years, it generally does not apply — for example when the property was used as the main residence for most of the period, or when it was received by inheritance. These details make the difference and must be checked on the actual case.

Buyers pay most of the taxes

Worth remembering: in a sale the main taxes (registration or VAT, mortgage, cadastral) are generally borne by the buyer. The seller mainly considers any capital gain.

The practical point

Tax matters are full of special cases and change over time: this article is to orient you, not to replace an accountant or the notary. A precise assessment before selling is always money well spent.

FAQ

When do you pay tax when selling a home?
Capital gains may be taxed if you sell within five years of buying at a higher price. After five years, generally not. There are exceptions to check.

Is selling the first home taxed?
Generally no when the property was the main residence for most of the ownership period. The details must be checked with a professional.

Does an inherited home pay capital gains?
Generally the sale of an inherited property does not generate taxable capital gains as for purchases, but it must be checked with an accountant or notary.

This article is informational and describes how things generally work. For your specific case the notaio (notary), accountant and qualified professionals are the reference; for legal matters, a lawyer.

Part of the complete guide to selling a home in Sanremo.