When a natural person, who acquired this real estate after January 1, 2002, sells a property, they are also obliged to determine capital gains according to the provisions of the Income Tax Act.

Therefore, in addition to the real estate transaction tax, income tax on capital gains from the sale of real estate may also be due.

The disposal of real estate is taxed, regardless of whether the property was sold in an altered or unaltered state. Any disposal (especially sale of capital, donation of capital, exchange of capital) is considered a capital disposal.

Capital gains are determined when the seller or donor of the real estate is a natural person.

When is the disposal of real estate taxable?

Any disposal of real estate is taxable: sale, donation, exchange, and company capitalization with in-kind contributions.

Exceptions are:

• Transfer from a deceased person to an heir according to inheritance regulations, when rights are claimed due to the death of a natural person,
• Disposal according to a contract for lifetime maintenance and a contract for annuity,
• Disposal according to a gift contract in case of death,
• Transfers due to expropriation,
• Transfer to a borrower or pledgee, and
• Transfer in compulsory settlement procedures.

 

Capital gains from the disposal of a residential property in which the taxpayer had a registered permanent residence, owned, and actually lived in for at least the last three years before disposal are also exempt from income tax.

The exemption cannot be claimed if the property was rented out or used for business activities.

Tax base for capital gains tax

It's important to note the difference between the value of capital (property) at the time of disposal and the value of capital (property) at the time of acquisition.

The value of capital upon acquisition represents the purchase value of the property and all costs, such as investments, maintenance, and valuation costs upon acquisition of the property (up to EUR 188.00). Taxes that the taxpayer paid upon acquisition of the property (i.e., real estate transaction tax and inheritance and gift tax) are also taken into account.

The date of acquisition is considered to be the date of contract conclusion or other legal transaction, or the date of final court decision (e.g., date of final inheritance decision).

The sale value is considered the value of the capital upon disposal, reduced by the tax paid by the taxpayer upon disposal and the costs of any possible valuation up to EUR 188.00.

If the difference between the value of capital upon disposal and the value of capital upon acquisition is positive, the final tax base is determined as the difference, reduced by standardized costs associated with the acquisition and disposal of capital. Standardized costs are recognized in the amount determined as the sum of 1% of the purchase value of the property and 1% of the value of the property upon disposal.

Standardized costs are not recognized when a loss is realized at disposal. By recognizing standardized costs for the purpose of taxing capital gains with income tax, a loss cannot be realized that could be offset against a positive tax base (gains) from the disposal of other capital.

What is the tax rate?

The tax rate depends on the length of time the property is owned.

The general tax rate is 25%. For each completed five years of property ownership, the tax rate decreases. After five years of property ownership, the tax rate is 20%, after ten years it decreases to 15%. If taxpayers own the property for more than 15 years (previously 20 years), the tax rate is 0%.

The law also allows for the postponement of the determination of tax liability. This is possible in cases where a taxpayer donates real estate to a spouse or a child, and when it is a gratuitous transfer based on a delivery contract. In this case, the determination of tax liability is postponed until the next taxable disposal of the donated real estate, carried out by the spouse or child. The date and value of acquisition are considered to be the date and value of the property at the time it was acquired by the donor.

Is appraisal mandatory?

Appraisal is not mandatory, but it is advisable in certain cases as it allows the taxpayer to more easily prove the market value at the time of acquisition or alienation (if it's, for example, about inheritance, exchange or donation). When selling inherited real estate within the first order of inheritance, taxpayers often have to prove the market value of the property at the time of acquisition through an appraisal, because the inheritance decision does not define the value of the property and only states the value of the entire inherited estate.

Taxpayer

Taxpayers (individuals who alienate real estate) must submit a declaration within 15 days of alienating the property, regardless of whether the property was alienated in a changed or unchanged state. A declaration does not need to be submitted if the property has been alienated after fifteen years of ownership. For legal advice and representation in tax proceedings, you can authorize a real estate lawyer.

Any alienation of real estate, especially the sale of real estate, giving real estate as a gift, or exchanging real estate, is considered a taxable alienation.

Tax resident taxpayers in Slovenia must submit a declaration when alienating a property located within the Republic of Slovenia or when alienating a property located abroad.

Non-residents of Slovenia must submit a declaration when alienating property located in Slovenia.

Declaration for income tax assessment

A lawyer can submit a declaration for income tax assessment from capital gains on behalf of the taxpayer. The declaration must be submitted within 15 days of alienating the property, on a prescribed form, which can be found on the financial administration's website: https://edavki.durs.si/EdavkiPortal/openportal/CommonPages/Opdynp/PageD....

Late submission of the declaration is an offense for which a fine is prescribed. In case of self-reporting, the taxpayer is not responsible for the offense, but must fulfill the tax obligation, along with interest.

For consultation and meeting regarding representation in tax proceedings, call attorney Jurij Kutnjak during working hours on phone number 00 386/2/25-23-780 or write to e-mail info@odvetnik-kutnjak.si