Example: reinvestment in annuities
Mrs. PPG sells shares of company "XX" listed on the Stock Exchange on March 7, 2023 for an amount of 50,000 euros. These shares were acquired in 1997 for the sum of 20,000 euros.
In August 2023, a life annuity is established by paying a premium of 50,000 euros.
In September, he also sold a property he had acquired in 1999 for 110,000 euros, including the costs and taxes inherent to the acquisition, for 250,000 euros.
The amount obtained from the sale is also used to establish the life annuity.
Determine the amount of exempt capital gains from reinvestment.
Solution:
1. Transfer of shares of company "XX"
Transfer value: 50,000
Acquisition value: 20,000
Capital gain (50,000 - 20,000) = 30,000
Exempt capital gains from reinvestment: 30,000
2. Transfer of the property
Transfer value: 250,000
Acquisition value: 110,000
Capital gain (250,000 - 110,000) =: 140,000
Exempt capital gains (1) (190,000 x 140,000) ÷ 250,000 = 106,400
Note to example:
(1) Since the maximum amount to be reinvested in a life annuity is 240,000 euros and the amount of the transfer exceeds, considering previous reinvestments, this amount, only the amount of the difference between 240,000 euros and the amount of previous reinvestments will be considered reinvested, that is, 190,000 euros (240,000 – 50,000).
Since the amount considered reinvested (190,000 euros) is less than the total amount received in the transfer (250,000 euros), only the proportional part of the capital gain obtained that corresponds to the reinvested amount will be excluded from taxation. (Back)