Selling a property is an exciting and often lucrative experience. However, it is essential to be informed about the tax implications involved, particularly the Income Tax (ISR). In this article, we will explain in simple terms what ISR is in a property sale and in which cases this tax can be exempted.

What Is ISR in a Property Sale?

ISR is a tax applied to the profit earned from selling a property. Simply put, the profit is the difference between the price at which you purchased the property and the price at which you sell it. This tax is calculated and paid at the time of the sale.

How Is ISR Calculated?

The calculation of ISR is based on several factors, including:

• Sale Price: The amount for which you sell the property.
• Acquisition Cost: The amount you originally paid for the property.
• Improvements: Expenses on upgrades that increased the property’s value.
• Deed and Commission Expenses: Legal costs and commissions paid.

The basic formula to calculate the profit is: Sale Price – (Acquisition Cost + Improvements + Deed and Commission Expenses).

When Can ISR Be Exempted?

There are certain conditions under which you can be exempt from paying ISR when selling your property. Here are the most important ones:

1. Sale of a Residential Property: You can only be exempt if the property you are selling is residential. Additionally, you must not have sold another property with an exemption in the past three years. This exemption applies to an amount of up to 700,000 investment units (UDIS).
2. Primary Residence: You must prove that the sold property was your primary residence. To do so, you can present documents such as utility bills (electricity, telephone, bank statements, etc.) in your name with your tax information. Important: Not all utility bills qualify for exemption purposes. Contact us to find out which ones are valid.
3. Timely and Proper Declaration: The notary public will be responsible for calculating and withholding the corresponding ISR or applying the exemption if applicable. You must ensure that the sale and the exemption (if applicable) are correctly declared to the tax authorities.

Benefits of Working with a Professional Real Estate Agency

Having the support of Camacho Bienes Raíces can significantly simplify the buying and selling process while ensuring compliance with all tax obligations. Some of the advantages include:

• Expert Advice: We have extensive knowledge of the legal and tax details related to property sales.
• Efficient Processing: We guide you through all the necessary paperwork and documentation, ensuring a smooth and efficient process.
• Property Valuation: We provide an estimate of your property’s value and offer recommendations to maximize your profits.

ISR in a property sale is an important aspect that should not be overlooked. Understanding the conditions for exemption can help you save a significant amount of money. At Camacho Bienes Raíces, we are here to provide the guidance and support you need throughout the entire sales process.

Contact us today for more information and start your journey toward a successful sale!