Sale of a second home to repay credit entitles you to exemption
With the approval of the Pacote Mais Habitação, the exemption of capital gains on the sale of second homes or building land came into force if you repay a loan for own and permanent housing.
The program, which came into force on October 7, includes a transitional rule that exempts from taxation capital gains arising from the sale of land for construction and secondary housing that are used to amortize the credit of the taxpayer's own and permanent residence or his descendants (children or grandchildren). According to this rule, there is a right to exemption from taxation of capital gains when "the value of the realization, deducted from the amortization of any loan taken out for the acquisition of the property, is applied in the amortization of outstanding capital in housing credit intended for habitationof the taxable person or his descendants".
This rule applies to sales made between 1 January 2022 and 31 December 2024. Those who have already sold a secondary home or land for construction in 2022 or 2023 before the entry into force of the Pacote Mais Habitação, have three months after the entry into force of the diploma to carry out the amortization that allows them to benefit from the measure.
In practice, anyone who sold a secondary home or land for construction between 1 January 2022 and 7 October 2023 does not lose the right to the exceptional capital gains exemption if they repay a mortgage for their own permanent home by 7 January 2024.
After the submission of the annual IRS return in which the sale of the secondary home or land for construction is communicated, the tax department may require a document proving the depreciation, so if you intend to benefit from the exemption, You should ask the bank for a document proving the amount and date of repayment.
It is also important to clarify that, according to the law, if the value of the sale of the property exceeds the amount applied in the amortization of the mortgage, the excess will be taxed according to the IRS rules for capital gains. There is no exemption on this additional amount.