COVID-19/Housing. Ombudsperson recommends suspending the deadline for reinvestment with a view to excluding taxation of real estate capital gains

The Ombudsperson recommended to the Secretary of State for Tax Affairs the suspension, for two years, of the period for reinvestment of the value of the sale of properties intended for own and permanent housing.

The legislative Recommendation aims to ensure that individual taxpayers, within the scope of measures to mitigate the effects of the Covid-19 pandemic crisis, are excluded from taxation of real estate capital gains.

The difficulties felt in the civil construction activity and in the functioning of public services, resulting from the isolation and confinements of the 2020s and 2021s, are now being reflected in delays in the completion of construction or works on real estate.

In the IRS declarations relating to the year of sale of their home, taxable persons undertake to acquire, carry out works or build a new property, also for housing, within the legal period of 36 months. Based on the wording of the law, which does not allow exceptions, the Tax Authority refuses to exclude the taxation of capital gains to those who failed to meet this deadline due to notorious constraints generated by the pandemic, as had already been noted in a letter sent to the Government.

Assuming the adoption of another equally fair and perhaps more effective solution, the Recommendation points out that, if opting for the suspension of the deadline, this should start from January 1, 2020.

To read the Recommendation in full, click here.