Covid-19/Housing. Ombudsman questions the Government about extending the deadline for reinvestment without payment of capital gains tax, also for families
In view of the constraints resulting from the pandemic period, the Ombudsman questioned the Secretary of State for Fiscal Affairs about the need to extend, also for individual taxpayers, the deadline for reinvestment of the sale value of residential property, in the purchase, construction or improvement of another property for the same purpose, without losing the benefit of exclusion from Personal Income Tax (IRS) on capital gains resulting from the sale of the first property.
Among the circumstances that may justify this extension, the Ombudsman points to the difficulties experienced in the operation of public services and construction activity, due to the Covid-19 pandemic, as well as the extraordinary regime established in the meantime by the legislator for legal entities.
The benefit of not having capital gains taxed under IRS is only granted if the reinvestment takes place within 36 months of the sale of the first property, a timeframe which, according to the complaints received, has been made more difficult to meet by the contingencies of the pandemic. The same deadline is found in the IRC Code, with the legislator having foreseen the suspension of its counting for two years.
The letter addressed to the Secretary of State for Tax Affairs may be read in full, here [in Portuguese only].