New tax law on property sale?

[Csphilli]

Hi,

I'm hoping someone here has experience with this subject fairly recently. I just sold my summer cottage and instead of a flat 30% taxes on profits less allowable deductions, the capital gains are being added to my yearly salary and then my tax bracket goes through the roof. Is this correct? Is this something that went into lawful effect recently or am I mistaken and this has always been the way it's been done?

[Rosamunda]

No, but as far as I know ALL sales of property are subject to capital tax (from 30-32%). If you have lived in and owned a property for two consecutive years it is exempt from capital gains tax. I can't find anything which suggests there has been a change.

The only thing I can think of is if you are selling forest and the summer cabin has not been declared as real estate (for example, it is a barn or shed that just happens to have running water, electricity, Canal Satellite and broadband)..... But even then... I don't think it would be added to your earned income. What makes you think they are going to add it to your yearly salary?

[Rip]

No, but as far as I know ALL sales of property are subject to capital tax (from 30-32%).

Right

If you have lived in and owned a property for two consecutive years it is exempt from capital gains tax.

(and a summer cottage used as one does not qualify)

The only thing I can think of is if you are selling forest and the summer cabin has not been declared as real estate (for example, it is a barn or shed that just happens to have running water, electricity, Canal Satellite and broadband)

It would not even need to be real estate. The fringe possibility that comes to my mind is that the OP has bungled his tax report and added the profit on the wrong line (it can still be fixed).

One possibly useful thing to remember: If the thing that has been sold (not necessarily real estate) was owned by the seller for 10 years or more one may deduct from the selling price instead of the purchase price + other qualified expenses a flat 40% of the selling price if this leads to lower taxes.
(you can make a similar deduction of 20% for stuff owned less than 10 years, but that rarely leads lo smaller calculated profit and less taxes)

[Csphilli]

What makes you think they are going to add it to your yearly salary?

I did it the first round and the report they sent me back, with resulting bills, included my salary. If it isn't part of this, I don't know why they would include the salary as well.

It would not even need to be real estate. The fringe possibility that comes to my mind is that the OP has bungled his tax report and added the profit on the wrong line (it can still be fixed).

I've been limited by the language barrier and so my wife has been filling out all the papers. But I'm here because I'm questioning the correctness of it because of the inclusion of my salary.

The paper she has been filling out is only 1 page in length. I'm looking at Vero now but would you happen to know what the correct form would be? It was a summer cottage owned less than 10 years. As a result, we first tried the flat 20% deduction but using the receipts from allowable deductions would be slightly more beneficial.

[Csphilli]

Would it be form '9 Capital Gains and Capital Losses (3013e)'

[Rip]

What makes you think they are going to add it to your yearly salary?

I did it the first round and the report they sent me back, with resulting bills, included my salary. If it isn't part of this, I don't know why they would include the salary as well.

I don't quite understand you, but let's put it this way: How much are you asked to pay? If it is 30% of the profit (if profit more than 50 000 €, then bit more but still not more than 32%) then it seems to be calculated as I would expect it to be. Your marginal tax rate on earned income would almost certainly be more.

You reported the profits mid-year? Maybe they do in that case collect the "extra" taxes from you salary instead of giving you a separate bill (I have no experience with that). The amount payable should not change because of that anyway.

[Rip]

Would it be form '9 Capital Gains and Capital Losses (3013e)'

That should be correct.

[Rosamunda]

http://www.vero.fi/en-US/Tax_Administra ... nformation

They have English speakers on the end of the phone from 9:00 - 16:15
It might be worth calling them directly. I have usually found them friendly and helpful. They are not out to get you!