The ten-year period, and the gain it brings to light

A landlord sells a flat after nine years for 320,000 €, having bought it for 300,000 €. He expects a gain of 20,000 €. Because he depreciated 54,000 € over those nine years and that depreciation reduces the acquisition cost, the taxable gain is 74,000 €.

Two periods, and what they depend on

Section 23 does not tax every private sale, only those within certain periods. Outside them a gain in private assets stays tax free — which is why the calendar decides more here than the price does.

For land, and for rights subject to the civil law rules on land, the period is ten years. What counts is the span between acquisition and disposal, and both moments are those of the obligating contracts.

For other assets a period of one year applies. That covers movables, crypto assets and foreign currency holdings, but not securities, whose taxation has long been governed by a system of its own.

Buildings and outdoor facilities are drawn into the ten-year period so far as they are erected, extended or enlarged within it. A new building on old land therefore does not restart the period; it is pulled into the running one.

The same applies to parts of buildings that are independent immovable assets, and to freehold flats and rooms held in part-ownership. The provision therefore bites at every level at which real property can be divided.

For other assets the statute excepts two groups. Disposals of items of everyday use stay outside — so the loss on selling a used car is as irrelevant as a rare gain would be.

And where several holdings of the same foreign currency are acquired and sold, the amounts acquired first are deemed to be sold first. The statute prescribes a consumption sequence otherwise known only from accounting.

Income from private disposals is other income under section 22 number 2. It is therefore taxed at the personal rate and not under a separate tariff — unlike investment income, which has its own system.

Subsection 2 draws a boundary that settles doubtful cases. The income is attributed to other categories of income so far as it belongs to them — a sale out of business assets is therefore not a private disposal at all.

That rule is why commercial property dealing does not fall under section 23. Anyone buying and selling regularly earns business income, and there there is neither a period nor a threshold.

The trap: one year becomes ten

The fourth sentence of number 2 contains an extension that is easily skipped and expensive. For assets from whose use as a source of income income is earned in at least one calendar year, the period rises to ten years.

A single calendar year suffices, and a single euro of income likewise. The extension therefore catches not the commercial case but the occasional one: letting a privately held asset once multiplies the period tenfold.

The provision sits in the number about other assets, not the one about land. For land it changes nothing, because ten years apply there anyway — it is aimed at everything that would otherwise be free after a year.

The third group of cases in the subsection is notable too. It catches disposals where the sale occurs earlier than the acquisition — the short sale, in which a period in the usual sense could not be measured at all.

Inherited or gifted: the clock keeps running

Anyone inheriting or receiving property as a gift has not acquired it. Without a rule of its own there would be no starting point for the period — and a sale the day after the death would be tax free.

The statute closes that gap in the third sentence. On a gratuitous acquisition, the acquisition of the asset by the predecessor is attributed to the successor for the purposes of this provision.

The clock therefore keeps running rather than starting afresh. Where the deceased bought the flat twelve years ago, the heir can sell it at once tax free; where he bought it three years ago, seven remain.

That attribution works both ways. It can favour the heir where the period is almost over, and it can catch him out where the deceased bought shortly before his death.

Transferring an asset into private assets by withdrawal or cessation of a business also counts as an acquisition. Anyone moving a business property into private assets thereby starts a fresh ten-year period.

Conversely the statute treats a contribution into business assets as a disposal where the sale out of those business assets occurs within ten years of the acquisition. Routing the asset through a business therefore does not escape the period.

The same holds for a hidden contribution into a company. In both cases a statutorily determined value takes the place of the sale price, precisely because no price was agreed.

Owner-occupied: the exception in two variants

For land the statute names an exception covering the commonest case of all: the owner-occupied home. It is worded in two variants, and it is enough that one of them is met.

The first requires exclusive use for one's own residential purposes between acquisition or completion and disposal. Exclusive means without a gap here: letting it out in the meantime destroys this variant entirely.

The second is considerably more generous. It applies where the property was used for one's own residential purposes in the year of disposal and in the two preceding years — before that it may have been let.

What matters is that the statute speaks of YEARS, not of full calendar years of use. Moving in during December of one year and selling in January two years later touches three calendar years and can already satisfy the variant.

Own residential purposes presuppose actually living there. An empty second home does not qualify, and a flat left rent-free to a child only under further conditions that the statute does not state at this point.

• variant 1: exclusively owner-occupied, from acquisition or completion to the sale
• variant 2: owner-occupied in the year of sale and the two years before it
• one of the two suffices, they do not apply cumulatively
• in both variants letting during the relevant period is fatal

Neither variant helps the landlord from the opening. He never lived in the property himself, so the ten-year period stands — and he missed it by a year.

One year of patience would have made the whole gain tax free. That is the practical lesson of this module: for a let property, the date of the purchase contract is the most important figure in the file.

What counts are the obligating contracts, not the land register entry. Time runs from notarial appointment to notarial appointment, and registration, which may follow months later, does not shift the period.

Anyone close to the end of the period can therefore place the moment of the obligation deliberately. A contract subject to a condition precedent does not help without more — what matters is the binding, not its fulfilment.

The gain, and why it turns out higher than expected

Gain or loss is the difference between the sale price on one side and the acquisition or production costs plus the related expenses on the other. The costs of selling therefore reduce the gain too, not only those of buying.

Acquisition costs are more than the purchase price. Notary and land register fees, agent's commission and the land transfer tax of the second module belong there — they raise the base and so lower the taxable gain.

Then follows the sentence that explains the opening calculation. The acquisition or production costs are reduced by depreciation, increased depreciation and special write-downs, so far as these were deducted in computing income.

Every deduction that lowered the running profit during the letting raises the disposal gain at the end. The benefit is not cancelled but caught up — depreciation is a deferral, not a saving.

On a flat with acquisition costs of 300,000 euros and nine years of depreciation at two percent, 54,000 euros arise by which the base falls. 300,000 becomes 246,000, and a raw gain of 20,000 becomes 74,000.

Anyone unaware of that sentence plans the sale on the wrong figure. And because the gain is taxed at the personal rate, it can at the same time pull up the rate on all the other income of the year.

The reduction bites only so far as the depreciation was actually deducted. On a property occupied by the owner throughout there never was any depreciation, and there the base stays unchanged.

It also bites only for the categories of income the statute names: letting, business, self-employment and the other surplus categories. Depreciation that never had a tax effect does not raise the gain.

On the other side stand the costs of selling. Agent's commission, notary fees for the deletion of charges, an early repayment penalty to the bank and the cost of a valuation reduce the gain directly.

The difference from the acquisition-related costs is only one of timing: one arose on purchase, the other on sale. In the formula of subsection 3 both sit on the same side and work alike.

The threshold is narrowly worded. Gains stay tax free where the total gain from private disposals in the calendar year was LESS THAN 1,000 euros — exactly 1,000 euros is therefore already taxable.

And it is an exemption limit, not an allowance. Once reached, the whole gain is taxable, not merely the excess. What counts, moreover, is the total of all private disposals of the year, not the individual sale.

Losses follow an order of their own, and a strict one. They may be offset only up to the gains the taxpayer earned from private disposals in the same calendar year, and not under the general loss relief.

They are not lost, however. The losses reduce the income the taxpayer earned or earns from private disposals in the immediately preceding or in following assessment periods — a one-year carry-back and an unlimited carry-forward.

Losses from this category therefore stay in their own pot. A loss on selling a flat does not reduce the tax on a salary; it waits for the next gain of the same kind.

One consequence of that is often missed. Because a year's gains and losses are first set off against one another, it can pay to place a loss-making sale in the same year as a profitable one.

Conversely a turn of the year cuts that possibility. Two sales in December and January sit in different pots for tax, and the offset then works only through the carry-back or the carry-forward.

The threshold also works per calendar year. Spreading two small gains over two years uses it twice; bundling them into one year may cross the limit and make both fully taxable.

The timing of a sale is therefore itself a variable to shape. It settles the period, the offset against other transactions and the threshold — three effects, all hanging on the calendar.