In this article you will find explained in full detail what the tax credit is and how it is calculated. If you're about to decide to sell your home to buy a new one, it's good to know that you can save several thousand in taxes--this can come in handy for your personal budget!!!
I thought it appropriate to write an article on this topic because, the tax aspect in buying a house is always evaluated only with the house to be purchased in mind and never with the history related to the sale of one's property, until the day of the deed. Today I would like to try to explain to you the complex legislation that governs it and that constitutes, in the perception of users, one of the main issues related to the purchase of a property.
As a real estate agent myself, I prefer to rely on the advice of a notary public for the precise calculation of this relief, in order to ensure correct information to my clients.
What is the tax credit?
The tax credit constitutes one of the many concessions created to facilitate the movement of the asset considered most important, the home; to obtain it, the taxpayer must have previously made a first real estate purchase (i.e., with Prima casa concessions) and must then have disposed of said property (i.e., disposed of it by selling it or even donating it) and then must arrange within a year to purchase a second property, again invoking Prima casa concessions.
The two purchases (of the first and second properties) can be subject to either vat (buying from a business) or registration tax (buying from individuals), but the second purchase must be made within one year of the deed by which one got rid of the first property.
How is the tax credit calculated?
The tax credit calculation is done by comparing the two main taxes: the lower figure is the amount of tax credit, which is generated automatically when this chain of purchases occurs.
Then a distinction is made about expendability: if the second deed is subject to registration (thus it was entered into between private individuals) the tax credit can be exploited on that occasion or be taken as a deduction in the tax return; on the other hand, if the second deed is subject to vat (thus it was entered into between a private individual and a business) the tax credit will necessarily have to be taken as a deduction and used at a later date.
It will come back good, however, when one faces a new and subsequent additional tax-not First Home-registry tax, or inheritance tax on an estate, or cadastral tax, or on a tax return for the year of purchase.
Tax credit, practical examples :
Mr. Rossi bought a house a few years ago from a company, paying 10 thousand euros in vat at the time of purchase; today he sells the property, buys another one from a private individual, and the registration tax to be paid is 6 thousand euros.
Should you or should you not pay it? And how should the excess of 4,000 be handled?
Mr. Rossi does not have to pay the 6 thousand euro registration tax; however, he is not exempt from paying the other taxes, because the taxation of the deed is not only composed of the registration tax, there are other items to be paid (mortgage, cadastral, filing fees).
The 4 thousand euro difference is lost, but the tax credit that has arisen is 6 thousand euro, so at the notarial deed stage, Mr. Rossi will not have to pay registration tax because he will have a tax credit of 6 thousand euro, and the due to the state will be zero.
At the preliminary stage, the real estate agent is required to register the deed, and Mr. Bianchi paid a registration tax, on the deposit, of 500 euros.
Will this money be lost?
No. Exceptionally, when the purchase is between private individuals, it is possible to recover the amount paid at registration , on the confirmation deposit, because there is a general rule that says this is deducted from the registration tax of the final main deed (the one that will be concluded downstream of the preliminary contract). Here the tax credit and the credit from recovery of registration tax already paid are added together: the difference in the tax credit, will be recovered on the tax return filed by the taxpayer.
If the Mr. Verdi buys for the second time from an enterprise: Recover or lose the registration tax paid on the deposit?
In this case it loses it. For technical reasons, since the final contract is subject to vat, it is not possible to recover the register on vat.
If, on the other hand, we are talking about down payment on the future price, in addition to paying the deed tax at the preliminary, often on down payments we pay a single fixed registration tax (in addition to the deed tax) of 200 euros, which will then be recovered at the final stage.
If you need to sell your home before buying it back click on the link below:
