Speculation Tax on Real Estate: When Does It Apply?

The Attempt to Prevent Speculative Transactions

Key Facts

• In some cases, selling real estate may incur a speculation tax.

• There are ways to reduce the speculation tax if you have to pay it.

Speculation Tax Reduces Profit from Property Sales

When you sell a house, land, or apartment, a ten-year speculation period applies. This period starts and ends with the notarization date of the purchase contract.

If you sell the property before the end of this period, you must pay the speculation tax.

When Does the Speculation Tax Apply?

The government wants to prevent speculative transactions to avoid excessive price increases.

What is speculation?

• Buying a property only to sell it for a profit.

How does the government stop it?

• Selling a property within 10 years of acquisition triggers the speculation tax.

• If you lived in the property yourself for the last three years before selling, the tax does not apply.

Inherited Properties

• The speculation period applies based on the date the deceased acquired the property.

• If the property was inherited and the acquisition was more than 10 years ago, no speculation tax is due, even if sold immediately.

Conditions That Trigger the Speculation Tax

• The property was not used as your own residence.

• If acquired through marital property division (e.g., divorce), the tax applies if sold within 10 years.

When Does the Speculation Tax Not Apply?

• Property owned for more than 10 years.

• Lived in the property the entire time.

• Lived in it for the last 2 years plus the year of sale.

• Selling a second home acquired for work purposes.

If none of these conditions apply, the tax likely applies. For partially owner-occupied properties (e.g., half-rented duplex), the tax is calculated proportionally.

How is the Speculation Tax Calculated?

The tax is based on profit from the sale:

Profit = (Sale Price + Depreciation – Selling Costs) – (Purchase Price + Ancillary Purchase Costs + Subsequent Construction Costs)

Example:

Losses from previous property sales can offset profits.

How to Reduce Speculation Tax

• Reduce the taxable profit, not the sale price.

• Deductible selling costs include:

  • Advertisement costs (newspaper or online)

  • Notary, land registry, and property transfer tax

  • Agent fees

  • Renovation and modernization costs

The Three-Property Rule

• Selling more than three properties within five years classifies you as a commercial trader.

• Speculation tax may retroactively apply for the third property.

• Tax authorities may extend the period to 10 years or adjust the property limit in special cases (e.g., divorce, emergency).