Government proposes canceling income tax on capital gains from asset sales

The difference in the value of the realty registered at the cadastre office and its market value will not be taxed. The Government suggests amending the law on the state tax of 1992 and declaring the capital gain as non-taxable source of income, Info-Prim Neo reports. The Government hopes to make the people that sell real estate to declare the real value of the realty in the sale-purchase documents and, as a result, to increase the budget collections from the state tax of 0.5% of the realty’s value, the informative note accompanying the bill says. The authorities consider that the proposed amendments will determine the transparency and accuracy of the data indicated in the contracts for the sale of realty by individuals. Given that the payment for notary services, the income tax on capital gains and the state tax are now calculated according to the value of the real estate declared in the sale documents, which should not be lower than the normative one, in most of the cases (90%) the seller indicates a lower value of the realty or the normative value, which in towns is 3-10 times lower than the market value. The Government is dissatisfied with the fact that the annual budget revenues from the state tax on notary authentication are artificially decreased about fourfold. According to the 2005 projections, about 51 million lei was to be collected to the state budget. De facto, there were accumulated only 11 million lei. The seller of an apartment worth 480,000 lei for instance must pay taxes of about 20,300 lei, including 40 lei for the certificate regarding the value of the realty issued by the cadastre office, 2,400 lei (0.5% in this case, but the sum varies depending on the realty’s value) for the notary service, 2,400 lei (0.5%) for the state tax, about 80 lei for registering the right to sell the realty and 15,400 lei for the income tax on capital gains (but which also varies depending on the realty’s value). If the amendments proposed by the Government are adopted by the Parliament, there will be no income tax on capital gains.