Real Estate Capital Gains: The Tax Agency Clarifies the Five-Year Calculation for Taxation

The Tax Agency, with its response to question no. 10/2025, has provided a fundamental clarification for taxpayers on the taxation of capital gains from the sale of real estate. The question relates to a property purchased as C/2 (warehouse) and subsequently converted into A/2 (civil housing) without construction work. 

The question put to the Agenzia delle Entrate is whether the five-year period, beyond which the sale does not generate taxable capital gain, should be calculated from the date of purchase or from the date of change of use. In addition, the taxpayer has asked whether the collection of a deposit following the signature of a preliminary contract may anticipate the tax relevance of the sale. 

The Principle of Taxation of Real Estate Capital Gains 

Article 67, paragraph 1, letter b) of the TUIR (Consolidated Income Tax Text) states that capital 

gains from the sale of real estate are subject to taxation if the transfer takes place within five 

years after purchase or construction. However, there are exceptions: 

• Property received by succession: does not generate taxable gains regardless of the date of sale. 

• Principal dwelling: if the property has been used as the principal dwelling of the seller or his family members for most of the period between purchase and sale, the capital gain is not taxable. 

• Building land: is always subject to tax, regardless of the time elapsed since purchase. 

The rule aims to avoid speculative transactions by taxing gains from real estate sales in a short period of time. 

The opinion of the Tax Agency: The change of destination does not affect the five-year 

period 

The Tax Agency has determined that the change of use without construction works is not considered a new "purchase" or a "construction", and therefore does not change the term from which the five-year period begins. In other words, the five-year period should always be calculated from the original date of purchase of the property and not from the date on which it was changed from storage to civilian housing. 

The Agency also pointed out that the preliminary sales contract does not transfer ownership of the property and, consequently, any collection of the deposit before the end of the five-year period does not result in taxable capital gains. Only the final act of sale has tax relevance. 

Implications for taxpayers 

This clarification is particularly relevant for those who have purchased a property and intend to sell it after a change of use. The decision of the Agency states that: 

• The five-year period to exclude the taxation of capital gains is counted from the original date of purchase, regardless of any changes in the intended use without works. 

• Signing a preliminary contract before the five years does not trigger taxation, provided that the notarial deed takes place after the expiry of the five years. 

• the cadastral references changes are only relevant for determining whether the property can be considered as a main dwelling for tax exemption purposes. 

Conclusions 

The question no. 10/2025 of the Tax Agency confirms a key principle for the management of real estate sales: the change in cadastral variations without construction works does not affect the five-year period for the purpose of taxation of capital gains. This means that property owners  who intend to sell without incurring taxation should always refer to the original date of purchase and not to any subsequent changes of destination.  This clarification provides greater certainty to those who plan real estate transactions and confirms the importance of proper tax management in sales.