What taxes can arise when reselling a property?
A resale, particularly one undertaken for investment, may generate a taxable capital gain. This archive article discusses the general five-year rules; it is not an exhaustive statement of the current regime.
The article states that a sale after more than 5 years generally falls outside the ordinary short-term capital-gains rule. Exceptions and later legislation must be checked, including rules relating to certain subsidised renovation works.
For a sale within 5 years, the article discusses the exemption where the property was the seller's or family's principal residence for most of the ownership period. Its example is a purchase on 1 January 2023 and sale on 31 December 2023, with principal-residence use for 6 months and 1 day. Actual qualifying use must be established.
For a taxable sale within 5 years, the article illustrates the optional 26% substitute tax on the gain, calculated as:
SALE PROCEEDS minus ACQUISITION COST minus QUALIFYING DOCUMENTED COSTS (such as agency, notary and eligible refurbishment costs). Where the substitute-tax option is available and elected, payment is arranged through the notary at completion.
Keep invoices and receipts: qualifying documented expenses can increase the recognised acquisition cost and reduce the taxable gain.
The following example illustrates the calculation:
PURCHASE €150,000
AGENCY FEE €4,500
NOTARY COST €5,000
REFURBISHMENT €25,000
SALE PRICE €220,000
CALCULATION: €220,000 − (€150,000 + €4,500 + €5,000 + €25,000) = GAIN €35,500
SUBSTITUTE TAX: €35,500 × 26% = €9,230. Where applicable, the seller may request payment through the notary; otherwise the gain is taxed under the relevant personal income-tax rules.
Correction to the original article: buying with first-home tax relief does not by itself guarantee that a later sale is exempt from capital-gains tax. The principal-residence exemption and the conditions for retaining purchase relief are separate matters. Obtain a case-specific assessment before selling.
