Some remarks on the new real estate sales tax guidance

From reading the new guidance on the tax on the sale and purchase of real estate, according to the new income tax law, it can be observed that in some parts that seem appropriate to include for discussion are the cases according to the following points:

First, in point 2.1. of the guideline[1], the second paragraph mentions that “from the reference prices, 1% of the value will be deducted for each additional full year of use, starting from the date of obtaining the ownership title for the first time.”

Remarks. In this case that is mentioned in the instruction, the benefit of the reduction in value according to the 1% depreciation is conditional and is not fully benefited according to the year of putting into use, since the part of the flats or apartments, houses, etc. if they have not received the title of ownership, the reduced value of the construction is not recognized according to its age, but according to the document proving the ownership. Meanwhile, in certain cases the legislator (property tax), i.e. the government aiming to get more income for the budget, has taxed individuals and families even for the cases when they use real estate.

Secondly, in point 2.1.1. of the Instruction it is mentioned that “In cases of sale of buildings (excluding apartments and constructions benefited by legalization) with amortization coefficient over 50%, the value of the sale of immovable property for tax purposes will be determined by persons licensed for the assessment of assets real estate, and will be taken into account by ASHK only once (for a completed transaction).”

Remarks. First, the 50% depreciation coefficient has no reference in the text of the guidance to which building it relates, except that it is given in the form of an example to clarify point 3.2 of the Guidance. Secondly, the exclusion of apartments and constructions benefited by legalization does not find any legal justification or other reason, except that it creates the opinion that it narrows the base of beneficiaries. Thirdly, the sentence that mentions that “In cases where the value of the building assessed by a licensed appraiser is less than half of the value determined according to the reference prices, for the effect of the sale value of the property, the value of determined by the licensed appraiser.” creates a handicap in relation to the treatment of other cases that are not included in this category, leaving room for tax justice not to be applied.

Of course, the example cases included in the Guide should be added to a more complete appendix in the future, since they do not include a large part of the cases of sale or execution of different ways of transactions related to the alienation of ownership of immovable property.

We think that the time has come that income tax should have its own Commentary, as it is the tax that has the largest dynamics and case base of the tax system, such as: labor tax, investment tax, capital tax and it is many times more complex than VAT or other taxes.

[1] https://qbz.gov.al/eli/udhezim/2023/12/29/34/df410349-38dd-4c74-9543-5e35a860e992