Tax on income generated through assets

taxation of asset income
capital gains tax on shares
capital gains tax on real estate
tax on rents
capital gains on shares
rental income
cadastral income

The section of this reform intends to separate income from assets in tax declarations and to tax them individually. The income from assets in question:

  • Capital gains ​​on shares
  • Capital gains on undertakings
  • Tax on rents

Capital gains on shares
These capital gains ​​will now be taxed as a deduction of capital losses. The assignment or the transfer of family companies may be an exception to this tax which would be as much as 15%.

Capital gains on real estate
Capital gains ​from the transfer of residential property remains exempt from tax. Capital gains on ​​land value would be taxable at the rate of 15% whereas they are currently exempt after a certain time period.

Taxation of actual rents
In reality, you are already taxed on the basis of the cadastral income (RC) (defined for the majority of cases in 1975) of the asset that you own and that you rent out, and not on the actual rent received. You are taxed on the basis of the indexed cadastral income, uplifted by 40%.
Given that the real estate income is added to other income streams, they are taxed at your marginal rate, that is to say your highest rate of tax.  Minus any loan interest, this income is therefore added to your other income streams.

The reform would be as follows:
Taxation of actual rents after deducting fixed charges of 30%
Exemption on the first €6000
Tax on the remaining balance up to 25%

In practice, we would expect that:
Your rental income amounts to €15,000
The tax calculation is as follows:
€15,000 (rent) – €4,500 (fixed charges) – €6,000 (tax-free threshold) = €4,500 (taxable amount)
Tax on rental income (25%) = €1,125

For the majority of landlords, this impact will be limited. On the other hand, the impact will be much more significant for multi-property landlords who are the intended target of the minister.

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