Immovable property

Last reviewed 21 Aug 2023

Tax depreciation

Straight-line

Declining balance method at a rate of 5 % on net book value.

Additional

N/A

Depreciation categories

Land

Not depreciable

Buildings

At 5 %

Tax base for buildings

The accounting value of the category recorded in the opening balance of
tax period

Special depreciation

If the remaining value of the assets at the beginning of a tax period
is less than 3% of their historic acquisition cost, the entire remaining balance is recognized as a tax-deductible expense in that
tax period.

Write-ups

N/A

Real estate income tax

The transfer of the right of ownership of immovable property, land and building is taxed with 15 % on capital gains realized. For buildings, transfer taxes are paid from the transferor, the tax calculated based on the area and usage (residential, commercial, other) in the range of ALL 100 - 2000/m2 depen- ding on the municipality where the property is located. Exemptions apply for the transfer of the ownership between members of the same family.

Object of taxation

Capital gains realized

Tax rate

15%

Tax collection

Tax on income from the transfer of the right of ownership is paid by the individual that sells the real estate. Local offices of real estate registration calculate and collect the relevant tax liability.
The payment of taxes is a requirement for the registration of the ownership transferring act.

Exemptions

Exemptions apply for the transfer of the ownership between members of the same family.

Property transfer tax

Object of taxation

The transfer of the right of ownership of immovable property, land and building is taxed with 15 % on capital gains realized. For buildings, transfer taxes are paid from the transferor, the tax calculated based on the area and usage (residential, commercial, other) in the range of ALL 100 - 2000/m2 depending on the municipality where the property is located.

Basis of assessment

Capital gains realized

Tax rate

15%

Property-related taxes

Real Estate Tax is levied yearly on buildings by municipality where the property is located, based on the property area/ square meter/usage.

Property tax

Objects of taxation

Real Estate Tax is levied yearly on buildings, commercial land and agricultural land, based on the property area/square meter/usage.
For commercial land (not public space), the tax is in a range of ALL 12 - 20/m² depending on the land location and usage.
For noncommercial land, the tax is
in a range of ALL 0.14 - 0.56/m² depending on the land location and usage.
For agricultural land, the tax is in the range of
ALL 700 - 5,600/hectare per annum depending on the land category, as determined by the Ministry of Agriculture.
For buildings the real estate taxes are applied as percentage of the tax base as follows:

• 0.05 % for residential buildings
• 0.2 % for buildings that are used for economic activity.

For buildings that have not been finished on time is applied 30 % of the regular tax rate.
Taxes on the transfer of ownership on buidlings is in a range of ALL 100 - 2,000 depending on location and usage.
Income from leasing contracts: Under Article 784 and onwards of the Civil Code, “income from
leasing contracts” is income from a contract through which a person is entitled to use and improve an immovable property. Income from leasing contracts is periodic compensation in cash or in kind that an individual generates from leasing real estate. If the tenant, according to the contract agreed among the parties, improves and adapts that property for the tenant’s needs, the expenses incurred by the tenant are considered to be the income generated from leasing contracts for the owner of the property.

Real estate funds

Owner of the fund assets

N/A

Annual valuation

N/A

Borrowing

N/A

Diversification of risk

N/A

Tax liability

N/A