How to Sell a Property and Avoid Paying IRS on Capital Gains

Is it possible to sell a property and not pay IRS on the capital gain?

Yes, in certain cases it is possible to avoid paying IRS on capital gains from the sale of real estate. Let's see in what situations this applies!

Exemption for Older Properties

Some properties are exempt from IRS on capital gains. The most common cases are:

• Urban buildings and land acquired before 1 January 1989
• Building land acquired before June 9, 1965

In these situations, the capital gains obtained from the sale of these properties are not subject to taxation.

Sale to the State or the Municipality

Capital gains resulting from the sale of residential properties to the State or Municipalities are also exempt from IRS. However, this exemption does not apply in the following cases:

• If the seller is resident in tax havens
• Sales motivated by the exercise of the right of first refusal

Exemption for Sale for the Purpose of Settlement of Housing Loans (HPP)

Until December 31, 2024, capital gains obtained from the sale of secondary residential properties and land for construction are also exempt from IRS, provided that:

• The sale value is used to settle a permanent housing loan (HPP) of the household or descendants
• Liquidation takes place within 3 months of the sale of the property

Exemption for Sale of Own and Permanent Housing (HPP)

When the property sold is a permanent home (HPP), you may be exempt from IRS under the following conditions:

• The sale value is reinvested in another HPP, between 24 months before until 36 months after the sale
• The property sold was the owner's HPP and had an associated tax address for at least 12 months prior to the sale

Benefits for People Over 65

For taxpayers over 65 years old, the IRS exemption on capital gains applies if:

• The proceeds of the sale are reinvested, within six months, in financial products intended for the pension supplement

These conditions allow tax exemptions that can be advantageous for those who want to sell a property, enabling tax optimization and taking advantage of the incentives in force.