How to calculate your home's equity gain in four steps - 2021 home equity 4 steps calculator - How many taxes do you have to pay in the IRPF for selling your house? The key to answering this question lies in how the equity gain on the sale of a home is calculated.

For the Treasury, selling the house is like selling a stock or an investment fund. That transaction will result in a profit or loss depending on whether you have made a profit or lost money. The way to find out is by knowing how the equity gain is calculated when selling your home.

In short, this profit is the result of subtracting the purchase price from the sale price. However, in order not to pay more taxes from the account you have to know well how that purchase and sale price is calculated.

This is the simplest part: calculate the transmission value of the home. In other words, how much you've sold the flat for in tax terms.

2021 home equity 4 steps calculator

The result is the selling price minus the expenses you assumed for selling the apartment. The most common deductible expenses are those of the notary, the commission of the real estate agency and taxes, specifically the municipal surplus value or Tax on the Value of Urban Land.

If you have donated a home, you will also have to pay income taxes just as if you had sold it. In this case the sale price will be the value of the house that appears in the Inheritance and Donations Tax that will be paid by the person who has received the house.

I'm sure you remember how much you bought the flat for. That figure is fine, but it is not the one you should use when calculating the equity gain from the sale of the apartment.

2021 home equity 4 steps calculator: To find that magic number you have to update the value of the house. The purchase price of the house for Hacienda is calculated by adding a series of expenses and subtracting others. Specifically, you can add:

• The expenses and taxes of the purchase. As when calculating the sale price, here you can also add to the purchase value of the house the taxes, the real estate commission and the rest of the expenses of constitution of the mortgage, except the commissions.
• Investments and home improvements that have served to increase the value of the house, extend its useful life or improve the space. These investments are different from conservation works, which you will not be able to add to the purchase price.

To this amount you will have to subtract the tax deductible amortizations, which is the money from the rent of the house if you have rented it.

2021 home equity 4 steps calculator

In the case of an inherited home, the initial purchase price will be the value of the home in the inheritance. The same thing happens with donations.

The difference between the result of the first step and the second step will be the gain or loss of equity. In other words, the profit you get for the IRS by selling your home.

On that amount you can apply the tax reductions or benefits to which you are entitled.

One of the most recurrent is the exemption for reinvestment in habitual residence. This advantage ends up not paying taxes if the house you have sold is your usual residence and you use the money to buy another one that will also be within two years. It can also apply if you bought your new home two years before selling the old one.

2021 home equity 4 steps calculator: You will also avoid paying taxes on the sale of the house if you are over 65 years old and the one you sell is your habitual residence or if you use that money to hire a life annuity.

Finally, if you bought the house before December 31, 1994 you can use a series of downsizing coefficients that will update the purchase price to collect the price increase.

Once you know how much you have earned from the sale of the house you will only have to add that amount to the rest of the capital gains and losses and calculate how much you will pay. The percentage to be taxed depends on how much you have earned in total.

These are the four tranches of savings in 2021:

• Earnings up to 6,000 euros – 19%
• Earnings between 6.000, 01 and 50.0000 euros – 21%
• Earnings between 50,000. 01 euros and 200,000 euros – 23%
• Earnings of more than 200,000. 01 euros-26% (does not apply to income 2020)

These tranches are applied progressively.

What if the result of the purchase is negative? In that case you will not have to pay taxes on the sale of the house, but you can take advantage of those losses to pay less income taxes.

In particular, you will be able to subtract that money from what you have earned with other investments during that year and the following four.

2021 home equity 4 steps calculator

More news:

The European Commission will approve on Wednesday the recovery plans of Spain and Portugal before the heads of State of the EU ratify them in July

The president of the European Commission, Ursula von der Leyen, visit this Wednesday, Madrid, and Lisbon, on an official trip to coincide with the final decision of the EC regarding its approval to the national recovery plans that the Portuguese and Spanish governments were presented in the spring to Brussels to receive and channel the european aid fund Next Generation EU.

It is planned that visits of von der Leyen match with the approval by the Commission of the recovery plans of Spain and Portugal, which were of the first countries to submit their proposals to Brussels for the use of community funds of recovery, according to Financial Times, which highlights that the approval final will be awarded in July, the heads of State and Government of the EU meeting of the European Council to subsequently start the distribution of aid.

For this reason, the approval of the EC brings closer the disbursement of European aid, which will occur between the coming weeks and the month of December. Spain will receive a total of 140,000 million euros between 2021 and 2026, 17.5% of the total fund, with 70,000 million in grants and another 70,000 million in loans, while Portugal will receive 14,000 million in transfers and 2,600 million in loans.

In this way, Spain will be the second most benefited country by Next Generation EU behind Italy, which will receive 191,500 million euros in aid and credits if it receives the approval of Brussels in the coming days. However, Spain will be the country that receives more funds in 2021, with 19,000 million euros, and also the most benefited between this year and 2023, with 79,529 million euros, to be exceeded by the Transalpine country in the tranche between 2023 and 2026.

Despite the fact that it is taken for granted the support of the European Commission to the Plan of Recovery, Transformation, and Resilience presented by the Spanish Government, which plans to create to 800,000 jobs in 3 years, and add 2 points to annual growth in GDP, Financial Times collected statements by the opposition leader, Pablo Casado, criticizing that the european funds should not be used to finance business projects in deficit and that have not well deserved the support of the banking.

For his part, the first vice president of the Government, Carmen Calvo, said to the daily british financial that the recovery plan will help to position Spain as a country that is more developed, competitive and modern, and rejected the criticism that the Executive will centralize the distribution of aid, stressing that the majority of the resources will go to the regions, which account for 50% of the goals that Spain must meet to continue to receive european funds, and municipalities.

In any case, the Spanish government has already begun to disburse aid on account of the European aid that will begin to receive in the coming weeks, borrowing to advance the funds to the autonomies without waiting for the approval of the EC. In addition, the first issue of 10-year eurobonds to finance the Next Generation EU fund was a success on Tuesday, capturing the expected 20,000 million euros, but with a demand that exceeded the supply by 7 times, according to Cinco Días.