Capital gain on disposal

Capital gain on disposal

For the vendor, the operation results in the disposal of one of its assets at a value that usually differs from the Net Book Value (NBV). 

reminder // the net book value of real estate asset corresponds to:

  • its cost price for accounting purposes (gross value), which consists of the purchase price, plus any costs linked to the purchase and any works executed on the property since the time it was purchased, 
  • less annual depreciations of the construction's costs applied.

Transferring the real estate asset out of the vendor’s ownership means determining the taxable capital gain on disposal. This capital gain corresponds to the difference between the selling price and the above-mentioned net book value.

This transfer is subject to corporation tax (CT) under ordinary law. 

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example

A real estate asset purchased on 1 July 2001 

  • Price : € 10 M
  • Purchase costs (déducted as expenditure in 2001): € 700 K
  • Land / construction split: 20/80
  • Annual depreciation: € 270 K
  • Sold on 15 December 2014 for € 14 M net vendor   

Net Book Value (NBV): ?

= € 10 M - [(€ 270 K x 180 / 360)  +  € 270 K x 12  +  (€ 270 K x 345 / 360)] 

= €10 M - (€135 K + €3,240 K + €258.75 K) 

= €3,633.75 K 

  • NBV at 15 December 2014:  € 6,366.25 K  (€ 10 M - €3,633.75 K) 
  • Capital gain: € 7,633.75 K  (€ 14 M - € 6,366.25 K) 
  • CT: € 2,604 K  (€ 2,545 K + € 59 K social contribution)

In the case of an insured loss or a compulsory purchase, the capital gain is determined not in relation to the selling price, but to the compensation received. In order to take account of the specific environment of the operation, the capital gain can be spread over the average depreciation term already applied to the asset that has been destroyed or compulsorily purchased, over a maximum period of 15 years (Article 39 quaterdecies 1 ter of the FTC).  

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Compulsory purchases

This applies solely to compulsory purchases as such, and to amicable disposals occuring after a declaration of public interest.


This document and the information it contains are intended to provide as complete and accurate information as possible. It is however theoretical in nature and must undergo all necessary checking prior to its application. FiscalImmo and its authors cannot in any circumstances be held liable on the basis of this document.