Surplus The private individual that sells a home can realize a taxable surplus.
The surplus is realized when the real estate property is sold at a sum which is higher than the price of purchase all costs included. The surplus is not taxable when:
1) five years passed after purchase;
2) the house was a principal abode for most part of the period of ownership: so if you are selling a house within two years from purchase, you will not pay any surplus if the house had been used as a residence for more than a year. Prior to 2006, sales of real estate property received as donation were also excluded from taxation.
From July 4th 2006 the taxation of surpluses was reintroduced in case of the sale of a property received as a donation, if resold within 5 years from the previous purchase on part of the donor. The initial value that has to be considered for the taxation is the price at which the donor had previously purchased the property. On the contrary, the exemption is provided for the inherited real estate property, even if sold in the (previous) five years The surplus has to be paid by expressly signalling it in the next statement of income or one can choose to pay the substitute tax of 20% on the surplus, directly at the time of the sale, upon written request in the deed.