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Declaring Real Estate in Income Tax Objectively in 2023

Income Tax in real estate raises many doubts, and do you already know how to do it?

Knowing how to carry out the process is considered important in order to avoid issues with the Federal Revenue and obtain the declaration that the company requires.

In this post, we will explain in an objective manner the ideal way to declare real estate in Income Tax in accordance with the new regulations of 2023.

Stay attentive to all the rules to avoid falling into the dreaded audit!

Who Should Declare Real Estate in IR in 2023?

It is necessary to include in the IR statement those who own assets or rights totaling more than R$ 300,000.

However, there are other criteria established by the Revenue to determine who should file the statement.

These criteria include:

Having received taxable income exceeding R$ 28,559.70 in the year; Owning assets or rights that exceed R$ 300,000; Having conducted operations in the stock exchange; Having received revenue from rural activities greater than R$ 142,798.50; Having gained profits from the sale of assets and rights subject to income tax; Having received exempt, non-taxable, or exclusively taxed at source income that exceeds R$ 40,000. Which Properties Should Be Declared?

It’s important to remember that all owned properties must be declared, including those that are still being paid for.

Furthermore, it’s necessary to inform the purchase price and the current value of the property.

If the property was acquired before 1988, it’s possible to use the historical value for its declaration.

Declaring a Financed Property

If the property was acquired through financing, it’s important to provide the name and CNPJ of the financial institution responsible for the financing.

It’s also necessary to indicate whether the property is used as a residence or as a source of income, such as rental income.

Furthermore, it’s necessary to inform the outstanding balance of the financing, if it’s still being paid, and the amount of installments paid during the year.

It’s also possible to report expenses related to property maintenance, such as renovations and repairs, as long as there are available invoices.

Declaring a Sold Property

Another important point is that if the taxpayer sold a property during the year, it’s necessary to report the selling price and the acquisition price, and pay income tax on the profit.

The capital gain is the difference between the price it was acquired for and the price it was sold for. The tax must be paid by the last business day of the following month after the sale.

Exemptions for Real Estate in Income Tax

Income Tax is a tax obligation that applies to the income and assets of individuals and legal entities.

In the case of real estate, there are situations in which the exemption from income tax can be applied. Below, we will present the main exemptions:

Sold Residential Property

If you sold a residential property worth up to R$ 500,000, it’s exempt from Income Tax.

This exemption is valid for properties sold by individuals and does not apply to commercial or industrial properties.

If the amount obtained from the sale exceeds R$ 500,000, the tax will only be calculated on the amount that exceeds this limit.

Exemption from income tax if you sold a residential property

When you sell a residential property, the tax due is calculated based on the capital gain.

However, there is an exemption for those who used the sale proceeds to acquire another residential property within 180 days. In this case, the income tax will be exempt.

Exemption for Small-Value Properties

For properties worth up to R$ 35,000, income tax on them is exempt, whether in the case of sale or donation.

Properties Acquired from 2005

Properties purchased from 2005 are subject to capital gain tax on sale.

However, properties purchased before the year 1988 are not subject to Income Tax. The tax rate varies according to the profit value in the case of a sale.

Income Tax for Rural Properties

The sale of rural properties is subject to capital gain tax.

However, there is an exemption when the sale of the property is intended for the purchase of another rural property within 180 days.

Sale of Property for a Lower Value Than Acquisition

If the property is sold for a value lower than the purchase price, there is no tax due on the capital gain. However, it’s necessary to justify the reduction in value upon sale.

In summary, there are several situations in which income tax exemption can be applied to properties. It’s important to remember that each case is unique and must be individually analyzed to verify the applicability of the exemption.

Therefore, it’s recommended to seek the guidance of a tax professional to avoid future problems.

We hope this post has helped you understand the correct way to declare real estate in Income Tax.

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