The sale of a property has multiple tax consequences and a complex procedure is needed to determine an accurate taxable basis. Failure to observe all legal provisions in the matter may have significant financial consequences, either in the sense of undervaluing the profit tax due, or in the sense of overvaluing it.
The approach should start with determining the tax value of the sold asset, considering two scenarios:
- The Revaluation (or successive reassessments) has / have resulted in a decrease in the historical cost of the asset
- The revaluation resulted in an increase of the asset value vs. the historical value
In the first case, when the revaluation generated a decrease, the tax value of the asset is the difference between the historical cost of the good and its tax depreciation. It is therefore necessary to adjust the tax deduction in order to supplement, for fiscal purposes, the expenses that were recorded in the Accounting at the moment of sale and which is lower than the deductible amount. To this end, the tax amount will be completed in the 101 statement as a deduction, in the 11th row (it will be summed up with the tax depreciation of the period) and the book value of the sold asset will be presented as a non-deductible expense in the 28th row (together with the accounting depreciation of the period).
In the latter case, when the revaluation generated a surplus value, the tax asset value is the difference from the present value as a result of the revaluation and the cumulative tax depreciation at the time of sale. Also, the revaluation reserve becomes taxable (less the amounts already included in the tax base due to amortization). The reporting in statement 101 is made as follows: the revaluation reserve will be filled in line 8 (similar to income), the tax amount will be completed in the 101 statement as a deduction, in the 11th row (it will be summed up with the tax amortization of the period) the book value of the sold asset will be presented as a non-deductible expense in the 28th row (it will be added to the accounting depreciation of the period).
Relevant Law provisions – Title I and II of the Fiscal Code:
- 8, point 44
- 26, paragraph (6)
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Tax Partner at Kreston Romania