JOINT INSTRUCTION
No. 34, dated 12.29.2023
ON TAX ON INCOME FROM THE TRANSFER OF IMMOVABLE PROPERTIES
In support of Article 102, paragraph 4, of the Constitution of the Republic of Albania and in implementation of Article 70, paragraph 3, of Law no. 29/2023, “On Income Tax,” as amended, the Minister of Finance and Economy and the Director General of the State Cadastre Agency,
INSTRUCT
Chapter I
General Provisions
1. Purpose
The purpose of this guideline is to determine the conditions, procedures, and methodology for implementing the provisions of Article 17, “Taxable Income from the Disposal of Immovable Property,” of the law no. 29/2023, dated 30.3.2023, “On income tax”, amended.
“Chapter 17
Taxable income from the sale of real property
1. Taxable investment income from the disposal of assets is determined as the difference between the sale price and the asset's purchase price.
2. The purchase price with respect to the non-deductible income from the disposal of real estate cannot be deducted from the tax base.
3. In the case of real estate acquired by inheritance or gift, or by relinquishment of ownership, the purchase price for tax purposes is the taxable value of the gifted or inherited property at the time of acquisition.
4. If the taxable income from an investment under this article results in a loss in a tax year, the taxable income from investments upon the disposal of the asset is considered to be zero.
5. The sale price of real estate shall be determined as the higher of the contract sale price and the reference price established in the applicable regulations for real estate.
6. The purchase value of the land in the case of exchanging the right of ownership of the land for the right of ownership of the building constructed on that site is calculated using the reference price of land per square meter approved by a decision of the Council of Ministers for cities and areas within the city. The sale price is calculated based on a reference to the market value of the real estate acquired in exchange for the land, taking into account all portions of the building plot from which the landowner benefits. The exchange of a building plot for a development plot, under an exchange agreement, does not constitute a taxable event for capital gains from the transfer of real estate. The methodology for calculating the purchase and sale prices is determined by a decision of the Council of Ministers.
7. Personal income tax on investment income from the transfer of real estate must be paid by the individual who transfers ownership of the real estate, before registering the above properties in the real estate registry, in accordance with the relevant legal provisions. The institution responsible for the real estate registry shall not register the property until the tax payment has been confirmed. The institution responsible for registering real estate transfers, by the 20th of the following month, transfers to the tax administration's account the tax collected in accordance with the provisions of this article.
8. The minister responsible for finance and the institution responsible for real estate registration shall, by joint directive, determine the conditions, procedures, and methodology for the implementation of this article.
Law 29/2023 On Income Tax
2. Objects
This instruction applies to individuals and other natural persons as defined in paragraph 3, below, for the purpose of calculating, declaring, and paying personal income tax arising from the alienation of immovable property.
3. Grounds for Exclusion
3.1 Not subject to “personal income tax” are the transfer of ownership of immovable property:
a) entrepreneurs (builders) in the construction field, registered as a business in the National Business Center (QKB), regardless of their status (“legal entity” or “sole proprietor”), who have construction as part of their economic activity and who build for the purpose of sale or rent;
b) investors in the construction field, who finance a construction product for the purpose of sale, in cases where they are registered for business purposes at the National Business Center (are equipped with a Tax Identification Number) and have been assigned tax responsibility.
3.2 The subjects mentioned in letters “a” and “b” of paragraph 3.1 above are payers, of:
a) local tax on the transfer of ownership of immovable property, according to the provisions of Article 28 of the law No. 9632, dated 30.10.2006, “On the local tax system”, as amended;
b) in accordance with the provisions of the law no. 29/2023, “On Income Tax”.
3.3 With the aim of eliminating opportunities for tax evasion and abuse of tax law principles, the following persons pay personal income tax on the transfer of ownership of immovable property:
Investors in the construction field, who finance the construction product for the purpose of sale in cases where they are not registered with the National Business Center and the tax administration (they are not equipped with a tax identification number) and have not been assigned tax liability;
b) commercial natural persons who obtain the construction permit, exploitation/usage permit, and construction registration in their own name as individuals, regardless of whether they obtain a tax identification number (NIPT) at the moment they begin selling the construction product as a “natural person,” or whether they subsequently close the NIPT and continue sales as individuals.
4. Definitions:
a) I'm done “real estate transfer”, the act of sale (sales contract), exchange between individuals, donation, inheritance, or relinquishment of real estate;
b) termin me“realized capital gain”, The positive difference between the selling price and the purchase price of land and/or building real estate. In cases where this difference is negative, the capital gain will be considered zero in every transaction.
Chapter II
CAPITAL GAIN TAX ON THE DISPOSAL OF REAL ESTATE
Taxable investment income
Due to the alienation of real estate, land and buildings, it is taxed at a rate of 15 percent of the realized capital gain. The individual who transfers ownership of real estate pays the tax before the registration of the deed of transfer of property, in accordance with the applicable laws and procedures. Only in cases of donation, inheritance or renunciation of real estate does the individual who acquires ownership of the real estate pay the tax. Real estate is not registered in favor of the beneficiary without proof of payment of this obligation to the Local Directorate of the State Cadastre Agency (LDASCA).
2. Real estate for sale value
The sale value of real estate is determined based on the process followed for the alienation of real estate.
2.1 In cases of sale by notarial deed, the sale value of the property is determined in the sales contract, which is signed by the parties (seller and buyer). The contract expresses the area in square meters of the property subject to the contract, the price per square meter, and its value. The contract is accompanied by a certificate/proof of ownership, cadastral map, planimetry, and other documents that serve for the registration of immovable property according to the relevant legislation. The sale value determined in the contract is compared with the reference prices for immovable property buildings and according to the valuation map for land immovable property, as defined in the following paragraphs.
In the case of buildings, this sale value, for the purpose of calculating the tax liability from the alienation of real estate, will be compared with reference prices. In cases where the property value according to the selling price per square meter (m2) if the contractually specified price is lower than the value based on the reference prices, then the area/city reference price will be taken as the presumed sale price. From the reference prices, 11 TP3T of the value will be deducted for each additional full year of use, starting from the date the property title was first obtained. The 1% deduction will apply to all types of real estate listed in letters "a" through "dh" of this point. This deduction shall not exceed 30TP3T of the reference price determined in Annex No. 1 of Council of Ministers Decision No. 132, dated March 7, 2018, "On the methodology for determining the taxable value of the real estate asset 'building', the tax base for specific categories, the nature and priority of information and data for determining the tax base, as well as the criteria and rules for the alternative assessment of the tax liability.".
2.1.1 In cases of the sale of buildings (excluding apartments and buildings obtained through legalization) with an amortization coefficient above 50%, the sale value of the real estate for tax purposes will be determined by licensed real estate appraisers, and will be taken into account by the ASHK only once (for a single transaction). In cases where the building's value as assessed by a licensed appraiser is less than half of the value determined by the reference prices, the value determined by the licensed appraiser will be considered for the property's sale value.
The reference price is determined below depending on the form of use and the type of immovable property (building):
a) Buildings The reference price of an apartment is determined based on the reference prices foreseen in annex no. 1 of the decision of the Council of Ministers no. 132, dated March 7, 2018, “For the methodology for determining the taxable value of real estate “buildings,” the tax base for specific categories, the nature and priority of information and data for determining the tax base, as well as the criteria and rules for alternative assessment of tax liability and the age of the building.
For residential apartments in buildings privatized by law No. 7652, dated December 23, 1992, "On the Privatization of State-Owned Housing", As amended, the price per square meter is 50 (fifty) percent of the price according to the table's zones, only in the case of the first sale. In this case, the 1% discount on the value for each year of use does not apply.
| Example No. 1 - Sale value of an apartment with a sales contract | |
| Individual AA sells apartment to individual BB, which is located in the city of Tirana, in administrative unit no. 2, zone 2/4. The apartment has a surface area of 75 m².2, and the year of first acquiring ownership of this property is 2004. The apartment is being sold with a sales contract dated August 20, 2024, and the total sale value of the apartment determined in the contract is 7,500,000 lek. | |
| Value for sale | To determine the sale value, we judge the type of property being transferred and the transfer process. Since we are dealing with a residential property type and the property transfer occurs with a sales contract, then to determine the sale value, we will compare the reference price of the apartment with the value in the sales contract: * Apartment value according to reference prices = 75 sq m2 120,300 lek/m2 – 1% * 19 years from the date the title of ownership was first obtained * 120,300 lekë/m2) = 7,308,225 lek Since the value according to the sales contract is greater than the value according to the reference prices, the higher value, i.e., 7,500,000 lekë (sale value), is taken as the sale value for tax calculation. |
b) Commercial building – reference price for m2 The construction area for economic activities of trade and services is 1.5 (one point five) times higher than the price of residential areas according to cities. This category also includes commercial units where mixed production, retail trade, or service processes are simultaneously carried out. In the areas included in the Municipality of Tirana, this coefficient is 2 (two) times higher.
| Example #2 – Sale value of a building for economic activity with a sales contract | |
| Individual AA sells to individual BB a shop (commercial unit), which is located in the city of Librazhd. This shop has a surface area of 60 m².2 It is sold with the sales contract dated 02/15/2024, which also specifies the total sale value of 3,000,000 lekë. The year of first acquisition of ownership title for this property is 2015. | |
| Value for sale | To determine the sales value, we judge the type of asset being transferred and the transfer process. Since we are dealing with a business property type and the asset transfer occurs via a sales contract, we will compare the reference price of the shop with the value in the sales contract to determine the sales value: * Shop value (retail unit) according to reference prices = 60m2 x (44,000 Lek/m�b2;)2– 1%* 8 years from the date the title of ownership is first obtained * 44,000 lekë/month2) x 1.5 = 3,643,200 Albanian Lek. Since the value according to the reference prices is greater than the value according to the sales contract, the higher value, which is 3,643,200 lekë (sales value), is taken as the sales value for tax calculation. |
c) Construction of covered parking and basements – the price per square meter of building area for covered parking and basements is seventy (70) percent of the price of residential apartment areas by city.
c) Construction for open parking areas, an open swimming pool, and open sports facilities – the price per square meter of building area for open parking spaces, open swimming pools, open sports facilities, such as soccer fields, mini-soccer fields, basketball courts, volleyball courts, tennis courts, golf courses, tracks for various athletic, motor, horse racing, and other similar sporting events; ports and airports of any category, for the entire built-up area they occupy, is 30 (thirty) % of the price of residential apartment surfaces by city, or by administrative units for the Municipality of Tirana.
d) Industrial buildings – the price per square meter of building area intended for industrial activities, such as: production, processing, or storage of raw materials, semi-finished products, or finished industrial products, such as factories, warehouses, depots, silos, refrigerated food storage facilities (excluding those of trading and service units), as well as other similar facilities, is 50 (fifty) % of the price of residential floor areas in the respective zone, according to cities or administrative units for the Municipality of Tirana. In this category, buildings serving non-public educational activities at any level are also included, as well as indoor sports facilities, including indoor swimming pools.
dh) Construction, used for agriculture and animal husbandry, or support activities The price per square meter of built-up area, used for agriculture and animal husbandry, or supporting activities such as collection, storage, and warehousing of agricultural and animal husbandry products, is thirty (30) percent of the price of residential areas in the respective zone, with the exception of food processing.
2.1.2 In the case of alienation of the right of ownership over land, this sale value, for the purpose of calculating the tax liability from the alienation of real estate, shall be compared with the price per square meter of surface, determined in the valuation map according to the legal act in force on the date of the contract.
If the price per square meter of surface area according to the land sale contract is less than the price per square meter of surface area determined on the valuation map according to the legal act in force on the date of contract conclusion, the prices according to the valuation map in force will be taken into consideration for tax calculation purposes.
| Example No. 3 - Sale value of land alienation by sale contract | |
| Individual AA has benefited from 20,000 m2 Agricultural land in cadastral zone 1271, Municipality of Divjakë, under law no. 7501, dated 19.7.1991 “On land”, amended, with the AMTP issued in 1994 (date on AMTP is 2.5.1994). At the time of receiving the land, individual AA paid no purchase value, as they received the land free of charge based on law no. 7501, dated 19.7.1991. In 2024, this person sold the land to buyer BB with the purchase and sale contract dated 10.1.2024, for the value of 7,280,000 ALL. | |
| Value for sale | To determine the sale value of agricultural land, we compare the price determined on the value map according to the applicable legal act on the date of contract signing with the sale value determined in the contract. The value of agricultural land, according to the valuation map 20,000 m2 364 lekë/m2 = 7,280,000 Albanian Lek Since the value according to the valuation map is equal to that according to the sales contract, the value to be used for tax calculation is the value according to the sales contract, 7,280,000 ALL (sales value). |
| Purchase value | To calculate the minimum purchase price of land, the selling price is 364 lek/m²2, is divided by the inflation index per respective year in Annex no. 1 attached to this instruction. Specifically, for the year 1994 the index is 3.625. Then, the purchase value of the asset of 20,000 m2 is: (20,000 m2 x 364 lekë/m2) : 3.625 = 2,008,276 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is: (sale value – purchase value) × 15% (7,280,000 – 2,008,276) × 15% = 790,759 lekë |
2.1.3 In the event of the simultaneous sale of land and the building on that land, for the purpose of calculating the tax liability, the tax liability from the sale of the building and the tax liability from the sale of the land will be calculated separately. Since the tax liability is calculated separately, the sale value in this case will be calculated separately for the building and separately for the land, according to the provisions of paragraph 2.1.1 for reference prices for buildings and paragraph 2.1.2 for prices according to the land value map.
2.2 In cases of real estate exchange, occurring between individuals, the value considered for sale will be the value of the property acquired through the exchange process. This sale value of the property, in the case of buildings, will be according to the reference prices provided in paragraph 2.1.1, and in the case of land acquisition, it will be according to the valuation map determined in paragraph 2.1.2.
In cases of inheritance, donation, and renunciation of property, the greater of the nominal value or market value of the real estate shall be considered the sale value.
Nominal value of immovable property shall be considered the last value on which tax was calculated at the body responsible for the registration of immovable property. For buildings, in case there is no value on which tax was paid, the nominal value shall be considered the operating cost in the year of registration of the act in the cadaster.
The market value shall be considered the value of the property according to the reference prices foreseen in paragraph 2.1.1 for buildings and in the case of land acquisition, it shall be according to the valuation map as per the provisions of paragraph 2.1.2.
3. Purchase value of real estate
3.1 The purchase value of real estate, acquired through a transaction (whether a purchase agreement, exchange, inheritance, gift, relinquishment, or revaluation of real estate), for which taxes have been calculated and this act has been registered with the competent authority for real estate registration, then the purchase value will be the value according to the last registration of this property on which taxes have been calculated. This value, if it exists in another property alienation act, is made available to notaries during the request for alienation of real estate by the competent authority for alienation of real estate.
3.2 In cases where we cannot determine a purchase value according to the provisions of paragraph 3, the purchase value shall be as follows:
For buildings constructed and registered in DVASHK, that do not have a purchase value according to the provisions of paragraph 3, or the purchase value is expressed in currencies such as gold francs or gold napoleons, as well as for buildings privatized under law no. 7652, dated 12.23.1992, “On the privatization of state housing,” as amended, for the purpose of determining the tax on the transfer of ownership, the purchase value (deductible value) shall be the cost of use per square meter determined by the currently effective sub-legal act for the National Housing Authority, in the year of real estate registration.
If in cases of inheritance, gifts, or relinquishments for which no property value has been recorded, the date of registration of the deed shall be considered the year for calculating exploitation costs.
| Example No. 4 – Purchase value of buildings constructed and registered in the local directorates of the State Land Registry Agency (DVASHK) that have no purchase value. | |
| Individual AA, residing in Gjirokastër, owns a residential apartment with an area of 120 m².2 benefited by law no. 7652, dated 23.12.1992 “On the privatization of state-owned housing”, as amended, and registered in DVASHK in 1999. The year of first acquisition of ownership title for this property is 1999. In 2024, individual AA sells the apartment to individual BB for the amount of 4,300,000 Albanian lek. | |
| Value for sale | To determine the sale value of the apartment, we compare the sale value according to the contract with the reference prices for apartments. Since this apartment was acquired through Law no. 7652, dated 23.12.1992, and this is the case of the first sale, the reference price per square meter is fifty (50) percent of the zone's reference price. The sale value of the apartment that individual AA will sell, according to reference prices (2024), is: 120 m2 x 47,400 leki/m2 x 50 % = 2,844,000 lekë Since the sales value according to the contract is greater than the value according to the reference prices, then for the tax calculation, we will use the sales value according to the sales contract, i.e., 4,300,000lek (Sales Value). |
| Purchase value | Since we cannot determine a purchase value according to the provisions of paragraph 3.1, we will base the determination of the purchase value on the provisions of paragraph 3.2, letter “a”. Therefore, as the discounted value, we will take the value according to the exploitation cost, determined by the ECB for the year in which individual AA registered the apartment in his ownership (the year 1999): 120 m2 35,724 lekë/m²2= 4,286,880 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is: (sale value – purchase value) × 15% (4,300,000 – 4,286,880) × 15% = 1,968 lekë |
b) For land, if we do not have a purchase value according to the provisions of paragraph 3, the purchase value will be the value calculated using the land price indexing according to the valuation map, with the average annual inflation calculated for the year in which ownership was acquired (annex no. 1 attached to this joint instruction).
3.3. In case the previous purchase contract was made in foreign currency (dollars, euros, etc.), the conversion to lek is done at the exchange rate of the day on which this purchase was made.
4. Income tax from alienation of immovable property in cases of donation, renunciation, and inheritance
4.1 For cases of transfer of ownership through donation and inheritance, according to the provisions of chapter VI of law no. 29/2023, “On income tax”, as amended, or renunciation of ownership in favor of a third party or other co-owners, the transaction is considered taxable and for the purposes of calculating the tax liability, the procedure will be as in the case of transfer of ownership of land and building through a sales act.
The appraisal report for gifted or renounced property is not mandatory to be submitted in the documentation for the transfer of real estate ownership through donation or renunciation. The value of assets reflected in these reports, as well as in donation or exchange contracts, is not indicative for the calculation of realized capital gains.
4.2 Excluded from income tax on capital gains on real estate are:
a) donations and inheritance acquired by/or through first and second-degree legal heirs, according to articles 361 to 363 of the Civil Code, as well as donations and inheritance within the sibling relationship;
b) gifts and inheritances received in addition to those specified in letter “a” up to 5,000,000 lekë per taxpayer for real estate;
c) Transfer of ownership rights to legal heirs according to articles 361 to 363 of the Civil Code, respectively through donation and/or renunciation of property, when the property originates from mandatory co-ownership acquired based on Law no. 7501, dated 19.7.1991, “On Land”, as amended.
| Example no. 5 – Sale value of donated buildings and purchase value of privatized buildings | |
| Individual AA, Korçë, gifts cousin BB an apartment of 220 m².2, with donation deed dated 01/15/2024. Individual AA acquired this apartment through privatization in 1992, under law no. 7652, dated 12/23/1992, “On the privatization of state-owned housing,” as amended, and registered it in their ownership at DVASHK in 1999. | |
| Value for sale | To determine the sale value of the apartment, in cases of donation, the sale value is equal to the greater value between the value according to reference prices and the value upon which the donor has paid tax for this property. Since this apartment was acquired through Law no. 7652, dated 12.23.1992, and we are in the case of the first sale, the reference price per square meter is fifty (50) percent of the area's reference price. The sale value of the apartment, which individual AA will donate, according to reference prices (2024) is: 220 m2 x (45,800 lek/m2 x 50%) = 5,038,000 lekë Since gifts to cousins are not exempt (Chapter VI, Law 29/2023), and at the same time the value of the real estate is greater than 5,000,000 ALL, then tax will be calculated on this property. Since this property will be gifted, the sale value will be the value according to the reference price of 5,038,000 ALL (Sale Value). |
| Purchase value | The purchase value for an apartment acquired through privatization under Law no. 7652, dated 12.23.1992, “On the Privatization of State-Owned Housing,” as amended, and which is being sold (gifted) for the first time, is equal to the value according to the utilization cost per square meter.2 the year in which the asset was registered in DVASHK (1999 cost). The operating cost for the city of Korça in 1999 is 25,145 lek/m.2. Then, the purchase value of the real estate is: 220 m2 x 25,145 = 5,531,900 leks |
| Calculated tax | The tax that beneficiary BB must pay is: (sale value – purchase value) × 15% VAT (5,038,000 – 5,531,900) × 15% VAT = 0 lekë. In this case, the tax is 0 lekë since the sale value is lower than the purchase value. |
| Example No. 6 – Sale value of buildings resulting from abandonment | |
| Individuals AA, BB, and CC, residing in the city of Kavajë, each own a 1/3 share of a store with a surface area of 90 m².2, purchased in 1995, for a total amount of 900,000 lek, for which tax has also been calculated. The year of the first title of ownership for this property is 1992. On 03/20/2024, individual AA requests before a notary to renounce their ownership of this shop, and for this purpose, they will issue a notarized declaration. This property, from which ownership is renounced, is equally acquired by the other two co-owners, individual BB and individual CC. The portion of the property from which ownership is renounced is 1/3 of the shop, i.e., 90 m².2 3:3 = 30m2 The property area obtained by individual BB and individual CC is equally, specifically: Individual BB and individual CC, respectively each obtains the area: 30 m2 : 2 = 15 m2 Since the income from the disposal is taxable, individuals BB and CC, who receive the corresponding shares from 15 m2 Before renouncing, before winning the ownership title, they must calculate the tax. | |
| Value for sale | To determine the sale value of the beneficial interest in the parts store, we establish the value based on the store's reference price for these parts. Since the year in which title to this property was first acquired is 1992, that is 31 full years until the date of sale (March 20, 2024), the discount works out to 11% per 3-year period × 31 years = 31%. However, as provided in this directive, this 1% discount, calculated for each full year since the property was first titled, must not exceed 30% of the reference price; in this case, the reference price will be reduced by 30%. The sales value of spare parts for the store that individuals BB and CC will benefit from, according to reference prices (year 2024) is: BB individuals 15 meters2 x (51,000 lek/m2 – 30% * 51,000 lek/m2)*1.5 = 803,250 ALL CC Individuals 15 meters2 x (51,000 lek/m2 – 30% * 51,000 lek/month2)*1.5 = 803,250 ALL For the purpose of calculating tax liabilities, the sale value will be considered according to the reference prices, so the sale value for individual BB will be 803,250 lekë, and the sale value for individual CC will also be 803,250 lekë. |
| Purchase value | The purchase value in this case, given that the shop was acquired through a purchase agreement in 1995 for the amount of 900,000 lekë on which tax was calculated, is determined as follows: Purchase value for m2 = (900,000 Albanian Lek/m2) / (90 m)2) = 10,000 leks2 Purchase value for individual BB = 15 m2 10,000 lekë/m2 = 150,000 lekuPurchase value per individual CC = 15 m2 10,000 lekë/m2 = 150,000 leke |
| Calculated tax | The tax that beneficiaries must pay from a relinquished property is: Individual BB (sale value – purchase value) x 15% (803,250 lek – 150,000 lek) × 15 % = 97,988 lek Individual CC (sale value – purchase value) × 15% (803,250 lek – 150,000 lek) × 15 % = 97,988 lek |
4.3 In the case of the sale of real estate, land and/or buildings, acquired by inheritance and court decisions, the purchase value shall be considered:
a) When the building and/or land has a value according to notarized deeds or revaluation registered in DVASHK, before, during, or after the registration of the inheritance certificate, the value of the building and/or land according to these deeds, registered in DVASHK, will be taken as the purchase value (deductible value).
| Example no. 7 – Purchase value of inherited, revalued buildings | |
| The three brothers AA, BB, and CC, residing in Peshkopi, own an apartment with an area of 120 m².2, which they acquired through the sale and purchase agreement dated 05.20.2017, for the amount of 3,200,000 lekë. The property's title of ownership was first acquired in 2014. On 04.05.2020, the co-owners, taking advantage of the property revaluation law, revalued their property to 4,800,000 lekë. In 2024, co-owner AA dies. The other two co-owners obtain the inheritance certificate, which they register in the same year (2024) at DVASHK. (Inheritance between siblings, according to Chapter VI of Law 29/2023, is exempt from the calculation of property transfer tax.) In 2024, co-owner BB wishes to sell his share of co-ownership to individual DD through a sale agreement dated 01.23.2024, for the amount of 2,200,000 lekë. | |
| Value for sale | The sale value of the share that individual BB intends to sell, according to reference prices (2024), is: Individual BB's co-owned share consists of: a. Area acquired by purchase agreement: 1/3 of 120 m²2 40 meters2 The value for sale at free market prices is: 40 m2 x (49,000 Lek/m2 – 1% * 9 years * 49,000 lek/month2) = 1,783,600 lekë b. Area acquired by the inheritance certificate: 1/6 of 120 m²2 20 m2 The value for sale at free market prices is: 20 m2 x (49,000 lek/m2 – 1% * 9 years * 49,000 lek/month2)= 891,800 lekë The total value of sale is: 1,783,600 lekë + 891,800 lekë = 2,675,400 lekë Since the value according to reference prices is greater than the value in the sales contract, then as the value of sale for the calculation of the tax liability, we take the value according to reference prices, i.e., the value of 2,675,400 lekë. |
| Purchase value | Given that the last action for which tax has been paid, recorded in the property card, is the property revaluation, then the purchase value is the revalued value of the portion of the property that co-owner BB will sell. The purchase value for m24,800,000 lekë : 120 m2 = 40,000 lek/m2 Then, the purchase value of the real estate is: 40,000 lek/m2 x 60 m2 = 2,400,000 Albanian lek |
| Calculated tax | The tax that seller BB must pay is: (sale price – purchase price) × 15% VAT (2,675,400 lek – 2,400,000 lek) × 15% VAT = 41,310 lek |
b) When the building has no registered value at the time of purchase, the purchase value for the building property, acquired by inheritance, will be the value according to the operating costs of the year in which the inheritance certificate is registered.
| Example no. 8 – Purchase value of buildings acquired by inheritance | |
| Individual AA, residing in Fier, owns a residential building with a surface area of 98 m².2, with a value registered in DVASHK, acquired by inheritance deed and this deed registered in DVASHK on 08.15.2008. The year of the first acquisition of ownership title for this property is 2005. Individual AA seeks to sell this property to individual BB via a sales contract dated 01.23.2024 for the value of 5,000,000 lek. | |
| Value for sale | For determining the sale value, we will compare the reference price at the moment of the apartment sale with the value in the sale contract: 98 m2 x (53,100 lekë/m)2 – 1% * 18 years of use * 53,100 lek/m2) = 4,267,116 lekë Since the value in the sales contract is greater than the value according to reference prices, as the sales value for the calculation of the tax liability, we will take the value in the sales contract, i.e., the value of 5,000,000 lekë. |
| Purchase value | The purchase value is the value according to the 2008 depreciation cost, the year in which the heritage certificate was registered, so the value is 33,499 ALL/m2. The value of the immovable property at purchase is: 98 m2 x 33,499 lekë/m2 = 3,282,902 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is: (sale price – purchase price) × 15% = (5,000,000 lek – 3,282,902 lek) × 15% = 257,565 lek |
c) For immovable property (land) acquired by inheritance, in cases where we do not have a purchase value according to the provisions of letter “a” of paragraph 4.3, the purchase value will be taken as the value calculated using the land price indexing according to the valuation map, with the average annual inflation calculated for the year in which the inheritance certificate was registered (annex no. 1, attached to this joint instruction).
| Example #9 – Purchase value of inherited land | |
| Individual AA, residing in the administrative unit of Qerret in the district of Kavajë, Durrës county, has acquired agricultural land with a surface area of 1,200 m² as immovable property.2, with the inheritance of 2009, which he registered in DVASHK in 2010. The individual AA sells this land area to individual BB with a sales contract on 01/23/2024, for the amount of 427,200 Lek. | |
| Value for sale | For determining the sale value, we will compare the price according to the current valuation map at the time of land sale with the value in the sales contract. Sale value according to the valuation map: 1,200 sq m2 x 339 Albanian lekë/m2 = 406,800 lekë Since the value according to reference prices (valuation map) is less than the value in the sales contract, we take the value in the sales contract as the sales value, i.e., the value of 427,200 lekë. |
| Purchase value | The purchase value of agricultural land for tax calculation purposes shall be indexed with the index of the year of the ownership acquisition act (2009 index, which is 1.432): 1,200 m2 x 339 Albanian lekë/m2 1.432 = 284,078.2 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is(sale value – purchase value) × 15% VAT: (427,200 – 284,078.2) × 15% VAT = 21,468 lekë |
5. Income tax on the alienation of immovable property in cases of exchange
| Example #10 – Income tax on real estate alienation in case of exchange | |
| Individual AA residing in Tirana, on “Komuna e Parisit” street (fiscal zone 5/3), owns an apartment with an area of 140 m².2 (The year of first acquiring ownership title for this property is 2017), which was purchased by sales contract on 05/17/2020 for the amount of 12,000,000 ALL (the last tax registered for this property was calculated on the value of 12,000,000 ALL) and a shop with an area of 120 m²2 (The year of first obtaining ownership title for this property is 2017), which he bought with a sales contract on 07.09.2019, for the value of 23,000,000 ALL (the last tax registered for this property is calculated on the value of 23,000,000 ALL). These two properties, individual AA has agreed to exchange for a 5-story hotel in Librazhd, owned by individual BB, with an exchange contract drafted in the notary office on 02.25.2024. The hotel consists of a hotel area of 4,000 m²2 4,000 m2and from shops and restaurants on the first floor with an area of 1,200 sq m2. Individi BB purchased the hotel through privatization on 02/01/1993, with a value of 15,000,000 lek (the last value for which tax was calculated), and the year of first acquisition of ownership title for this property is 1993. | |
| The asset values that individual AA will exchange | A. The value of the assets that individual AA will exchange at the reference prices is: a) Apartment owned by individual AA: 140 m2 x (164,800 Albanian Lek/m2 – 1% * 6 years of use * 164,800 lekë/month2) = 21,687,680 Albanian Lek b) Individual-owned shop AA: 120 m2 x (164,800 Albanian Lek/m2 – 1% * 6 years of use * 164,800 lekë/month2) x 2 (housing coefficients) = 37,178,880 ALL The value of the assets that individual AA will exchange, according to the reference prices, is: 21,687,680 lekë + 37,178,880 lekë = 58,866,560 lekë The value of 58,866,560 lekë is the total value of the asset according to reference prices that individual AA exchanges and serves as the exchange value. |
| The asset values that individual BB will exchange | B. The value of the assets that individual BB will exchange at the reference prices is: a) Hotels: 4,000 m2 x (44,000 lekë/m)2 – 1% * 30 years * 44,000 lek/month2) x 1.5 (coefficient for housing) = 184,800,000 lek b) Shops and restaurants: 1,200 m2 x (44,000 lekë/m)2 – 1%*30 years * 44,000 lek/month2) x 1.5 (housing coefficient) = 55,440,000 lek The value of the assets to be exchanged by individual BB, according to the reference prices, is: 184,800,000 lekë + 55,400,000 lekë = 240,200,000 lekë The value of 240,200,000 lekë is the total value of assets at reference prices, which individual BB exchanges and serves as the exchange value. |
| Calculated tax | If there is a difference between the exchanged values, this difference will be taxed. In the specific case, the exchange value of the property exchanged by individual BB (the 5-story hotel in Librazhd) is higher than the exchange value of the property exchanged by individual AA (the shop and apartment in Tirana), therefore this difference will be taxed. Specifically, this difference is: 240,200,000 lekë – 58,866,560 lekë = 181,333,440 lekë Tax is calculated on this difference, which is paid by the individual who benefits from the exchange contract of the real estate, which has a higher value according to the reference prices. Therefore, in this case, the tax is paid by individual AA, who has realized a profit in value of 181,333,440 lekë through the exchange. The tax amount is: 181,333,440 lek x 15 % = 2,720,016 lek |
5.2 In cases of sale of immovable property that originates from an exchange contract for which tax was not calculated and paid at the time of exchange, the purchase value (deductible value) shall be the value determined in accordance with the provisions of point 3, “Purchase Value of Immovable Property,” registered in DVASHK. for real estate that is used for exchange.
| Example no. 11 – Alienation of immovable property originating from an exchange contract, for which tax was not calculated and paid at the time of exchange | |
| The individual BB, in Tirana, on “Komuna e Parisit” street (fiscal zone 5/3), owns an apartment with a surface area of 140 m².2 (the year of obtaining ownership title for this property for the first time is 2017), and a shop with an area of 120 m²2 (the year the title of ownership of this property was first obtained is 2017), which it acquired from an exchange contract with individual BB, the exchange contract is dated 02/25/2024 (example 10). In exchange, Individual BB has given Individual AA a five-story hotel in Librazhd, a hotel area of 4,000 m2 4,000 m2and from shops and restaurants on the first floor with an area of 1,200 sq m2. Individual BB purchased this hotel through privatization on February 1, 1993, for 15,000,000 lek (the last amount on which tax was calculated), and the year in which he first acquired title to this property was 1993. In 2024, under the sales contract dated November 10, 2024, individual BB sells his apartment and store to individual CC for 50,000,000 lek. | |
| Value for sale | We compare the contract sale price of the real estate assets with the value based on the reference prices of the properties being sold. The value of the assets being sold by individual AA, according to the reference prices, is: Apartments: 140 m2 x (164,800 Albanian Lek/m2 – 1% * 6 years of use * 164,800 lekë/month2) = 21,687,680 Albanian Lek b) The store: 120 m2 x (164,800 Albanian Lek/m2 – 1% * 6 years of use * 164,800 lekë/month2) x 2 (housing coefficients) = 37,178,880 ALL The value of properties for sale according to reference prices is: 21,687,680 lekë + 37,178,880 lekë = 58,866,560 lekë Given that the value in the sales contract is less than the value according to reference prices, we will use the value according to reference prices as the sales value, which is 58,866,560 Albanian Leks. |
| Purchase value | The purchase value will be the purchase value calculated according to the provisions defined in point 3 of this instruction, calculated on the assets irreparable, which was used for exchange. Specifically, the real estate that individual BB used for exchange is the five-story hotel in Librazhd, which he had purchased from privatization on February 1, 1993, at a value of 15,000,000 lek (the last value on which tax was calculated). The purchase value in this case is 15,000,000 lek. |
| Calculated tax | Since individual BB did not pay tax at the time of the exchange, the tax that seller BB must pay during this sales contract is: (sale value – purchase value) x 15% (58,866,560 lekë – 15,000,000 lekë) × 15% = 6,579,984 lekë |
5.3 In cases of property sale resulting from an exchange contract for which tax was calculated and paid at the time of exchange, the purchase value (deductible value) will be the value according to the provisions of point 3, “Purchase Value of Immovable Property,” registered in DVASHK for the immovable property used in the exchange.
| Example No. 12 – The transfer of real estate property arising from an exchange contract for which tax has been calculated and paid at the time of the exchange. | |
| Individual AA owns a 5-story hotel in Librazhd with a hotel area of 4,000 m².2 4,000 m2and from shops and restaurants on the first floor with an area of 1,200 sq m2, which he obtained from an exchange agreement with individual BB; the exchange agreement is dated February 25, 2024 (example 10). In exchange, individual AA gave individual BB an apartment with an area of 140 m²2, which he purchased with a sales contract on 05/17/2020, for the amount of 12,000,000 lek (the last tax registered for this property was calculated on the value of 12,000,000 lek) and a shop with an area of 120 m2, which he had purchased under a sales contract on September 7, 2019, for 23,000,000 lek (the most recent recorded tax for this property is calculated on the 23,000,000 lek value). In 2024, under the sales contract dated December 9, 2024, individual AA sells the hotel to individual CC for 220,000,000 lek. | |
| Value for sale | We compare the sale value of real estate according to the contract with the value according to the reference prices of the real estate being sold. The value of the properties that individual AA is selling at reference prices is: a) Hotel: 4,000 m2 x (44,000 lekë/m)2 – 1% * 30 years * 44,000 lek/month2) x 1.5 (coefficient for housing) = 184,800,000 lek b) Shops and restaurants: 1,200 m2 x (44,000 lekë/m)2 – 1%*30 years * 44,000 lek/month2) x 1.5 (housing coefficient) = 55,440,000 lek The value of the assets that individual BB is selling, based on the reference prices, is: $184,800,000 lekë + 55,440,000 lekë = 240,240,000 lekë Since the value in the sales contract is less than the value according to reference prices, we take the value according to reference prices as the sales value, which is 240,240,000 lekë. |
| Purchase value | The purchase value will be the purchase value calculated according to the provisions defined in point 3 of this instruction, calculated on the assets real estate that has been used for exchange. Specifically, the real estate that individual AA used for exchange are: 140 sq m apartment2, which it purchased under a sales and purchase agreement on May 17, 2020, for an amount of 12,000,000 lek (the most recent recorded tax for this property was calculated on the 12,000,000 lek value), anda store with an area of 120 m2, which he purchased with a sales contract on 09/07/2019, for the value of 23,000,000 lekë (the last tax registered for this property was calculated on the value of 23,000,000 lekë). The purchase value in this case is: 12,000,000 leke + 23,000,000 leke = 35,000,000 leke. |
| Calculated tax | The tax calculated for seller AA is: (sale value – purchase value) x 15% (240,240,000 lek – 35,000,000 lek) × 15% = 30,786,000 money However, since during the exchange, individual AA paid tax for the exchange in the amount of 2,720,602 ALL, the tax paid during the exchange will also be deducted from the tax calculated in this sale contract. The tax that seller BB must pay is: Tax calculated on sale – tax paid on exchange 30,786,000 leke – 2,720,602 leke = 28,065,398 leke |
5.4 If the real estate land, which is used for exchange with the property being sold, does not have a predecessor value, then the purchase price will be the price calculated using the land price indexing according to the value map, with the average annual inflation calculated for the year in which the exchange contract was registered in DVASHK.
6. Special Cases For income tax on capital gains from real estate sales
6.1 Sale of real estate acquired through a land exchange for building agreement
6.1.1 In the event of an exchange of land with a building's surface area, based on an exchange contract, no obligation arises for the calculation of capital gains from the transfer of real estate, neither for construction companies nor for landowners, regardless of their status. In this case, capital gains arise at the time of the alienation of the real estate acquired from the exchange.
6.1.2 In the case of the sale of real estate acquired from a land-for-building exchange contract, to calculate the realized capital gain, the purchase value and sale value are determined as follows:
a) Purchase value will be considered the value of the land portion belonging to the area of the building being sold.
i. The land value per square meter, given in exchange for the benefit of residential/commercial/service space, is determined based on the value the given land had in the last transaction prior to the exchange. When the landowner acquired this land through a transaction (whether a purchase agreement, exchange, inheritance, donation, relinquishment, or real estate reassessment) for which tax was calculated and this act was registered with the competent authority for real estate registration, the purchase value will be the value according to the last registration of this property on which tax was calculated. This value, in case there is a property alienation act, is made available to notaries during the request for alienation of real estate by the competent authority for real estate alienation.,
ii. In cases where there is no value for the exchanged land according to the provisions of paragraph (i), the value of the land per square meter given in exchange for the profit of the residential, commercial, or service area will be considered the value, according to prices per m2 land surface area as provided for in the land valuation map in the Republic of Albania according to the Decision of the Council of Ministers in force at the time of the registration of the exchange contract between the investor and the landowner in the competent authority for the registration of immovable property.
b) The sale value of the building is determined by the sales contract, which is signed by the parties (seller and buyer). The contract specifies the area in square meters of the property subject to the contract, the price per square meter, and its value. The contract is accompanied by the certificate of ownership/mortgage certificate, cadastre, map, floor plan (as applicable), and other documents that serve for the registration of real estate in accordance with the field's legislation.
This sales value as determined in the sales contract, for the purpose of calculating the tax liability from the alienation of real estate, is compared with reference prices. In cases where the value of the property according to the sales price per square meter (m2if the price determined in the contract is lower than the value according to the reference prices, then the reference price of the area/city will be taken into consideration as the assumed sale price.
| Example No. 13 – Capital gain from the sale of buildings acquired from a land-for-building exchange contract | |
| Individual AA owns an apartment in the city of Berat with an area of 72 m².2 which he acquired through a land-building exchange contract. He sells this apartment to individual CC with a sales contract dated 1/12/2024, for the price of 3,700,000 lekë. Regarding the exchange contract, we clarify that individual AA entered into the construction contract with the construction company “BB LLC” on 7/5/2014 and registered it with DVASHK on 9/20/2016. The land subject to this contract has an area of 720 m².2 and it is located in the city of Berat. The landowner obtained this land as an heir from his father and we have neither a purchase value nor a previously calculated tax for this land. In exchange for this land, the landowner received 4 apartments from the construction company through an exchange contract, and they were registered with DVASHK on 09/20/2016. The apartments built have an area of 56 m² respectively.2, 72m2, 74 m2 the 86 m2. | |
| Value for sale | To determine the sale value of the apartment, we compare the sale value according to the contract with the reference prices for apartments. The value of the apartment, according to the reference prices, is: 72 meters2 x (41,400 lek/m2 – 1% * 7 years of use * 41,400 lekë/month2) = 2,772,144 Albanian Lek Since the value with reference prices is less than the value reflected in the sales contract, then the sales value will be taken as the value in the sales contract, i.e., the value of 3,700,000 lekë (sales value). |
| Purchase value | As purchase value, we would calculate the value based on the price of the plot of land allocated to the 72 m² apartment.2 that individual AA sells. The value of the land on 09/20/2016, when the exchange contract was registered with DVASHK, was 4,183 ALL per m².2. Thus, the total value of the land was 720 m2 x 4,183 Albanian Lek/m2 = 3,011,760 lek. This land value was exchanged for: 56 m2 + 72 m2 + 74 m2 +86 meters2 = 288 m2 building area. So, consequently, the value of 1 m2 built-up area obtained is: 3,011,760 lek : 288 m2 = 10,457.5 lekë m2 Since individual AA only sells 72 m2, the amount that will be calculated as the purchase price for this apartment will be: 10,457.5 lek/m2 x 72 m2 = 752,940 lek |
| Calculated tax | The tax that seller AA must pay is: (sale value – purchase value) x 15 % (3,700,000 – 752,940) x 15% = 442,059 lekë |
6.2 Simultaneous Sale of Land and Building
In the event of simultaneous sale of land and the building on that land, for the purpose of calculating the tax liability, the value of the tax liability from the sale of the building and the value of the tax liability from the sale of the land will be calculated separately.
In this case, the sale value and purchase value will be calculated separately for the building and separately for the land, respectively, according to the provisions of paragraph 4 and paragraph 5 of this instruction.
| Example no. 14 – Sale value of the simultaneous alienation of land plot and the building within this plot, by sales contract | |
| An individual AA, residing in Pogradec, owns a 2-story house, which is built on a land area of 100 m².2, as well as a free land area of 300 m2, around this building, acquired in 2007 by decision of the Property Return Commission. The year of acquisition of the ownership title for this property for the first time is 2004. This property, individual AA sells to buyer BB for the value of 7,500,000 ALL, with the sales contract dated 13.1.2024. *In this case, the tax liability is calculated as the sum of: tax liability calculated for the 200 m² building2 100 meters2 x 2 above building area), and the tax liability calculated for the total land area of 300 m2. | |
| Value for sale | To determine the purchase value, we compare the property's value based on reference prices with the value in the sales contract. a. Sale value of the building: Since the sale contract specifies a value for the entire property (land + building), to determine the building's value, we subtract the land's value from the total contract value according to the valuation map (400 m2 true all x 220 Albanian Lek/m2 = 88,000 lekë), so the value of the building according to the sales contract is: 7,500,000 – 98,400 = 7,401,600 lekë The sale value of the building according to reference prices for 2024 is: 200 m2 x (49,900 lek/m2 – 1%* 19 years* 49,900 lek/month2) = 8,083,800 lekë. Since the building's value according to the reference prices is greater than that in the sales contract, the sale value for the building is taken at the reference price, namely 8,083,800 lekë. b. Saleable value of land In this case, the price will be determined according to the map of values calculated above, which also corresponds to the sale value reduced for the land from the sales contract. 400 m2 truall x 220 lekë/m²2 = 88,000 lek |
| Purchase value | The purchase value would be taken, as real estate has no predecessor value: a. Purchase value of the building: With respect to the building, its value will be calculated based on the operating cost for the year in which ownership of this real estate was registered (2004 cost): 200 m2 x 29,166 Albanian Lek = 5,833,200 Albanian Lek b. The purchase value of land Regarding the land, since the land was acquired according to VKKP in 2007, the purchase value is: 400 m2 x 220 lek/m2 1.514 (2007 index) = 58,124 lekë |
| Calculated tax | The tax that seller AA must pay is: a. Tax calculated on the building (sale value – purchase value) × 15% (8,083,800 lekë – 5,833,200 lekë) × 15% VAT = 337,590 lekë b. Tax calculated on the land (sale value – purchase value) × 15% (88,000 lekë – 58,124 lekë) × 15 % = 4,481 lekë The total tax liability is: (the tax liability for the building + the tax liability for the land) 337,590 Albanian Lek + 4,481 Albanian Lek = 342,071 Albanian Lek |
6.3 Sale of real estate assets acquired by the National Housing Agency
The National Housing Agency (NHA) values all contracts it enters into with citizens for the sale and purchase of housing and sells them at the real cost of all direct expenses incurred for the construction of the apartment. The valuation of the apartment that the citizen hands over to the NHA is done by multiplying the usable area of the apartment by the usable cost of the year when the new apartment built by the NHA with state funds, where the citizen handing over this apartment was accommodated, was handed over.
| Example No. 15 – Purchase value of buildings acquired from EKB, against a sum and property | |
| Citizen AA, a resident of Divjakë, received a two-bedroom apartment with a kitchen and a surface area of 110 m² from EKB in 2016.2.The year of first ownership title acquisition for this property is 2015. The citizen in the sales contract made with EKB dated 20.5.2016, handed over to EKB a one-room and one-kitchen apartment with an area of 60 m.2, and is also obliged to pay the ECB the amount of 2,200,000 ALL. Citizen AA, on 15.1.2024, sells the apartment with an area of 110 m2 to citizen BB under a sales contract for 7,000,000 lek. | |
| Value for sale | To determine the sale value, we compare the apartment's reference price with the value in the sales contract: We calculate the sales value at the reference price: 110 meters2 x (40.100 ALL/m2 – 1% * 8 years of use * 40,100 lekë/m2) = 4,058,120 leks Since the contract sale value is greater than the reference prices, the sale value for tax calculation is the contract sale value of 7,000,000 ALL (sale value). |
| Purchase value | To calculate the purchase price of the apartment, in this case, the amount paid to EKB is calculated as well as the value of the apartment given in exchange, based on the cost of use in the year the newly built apartment by EKB was handed over (cost of the year 2016). 60m2 x 37,983 ALL/m2 = 2,278,980 Albanian Lek Purchase value is: 2,278,980 Albanian Lek + 2,200,000 Albanian Lek = 4,478,980 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is: (sale price – purchase price) × 15% (7,000,000 – 4,478,980) x 15 % = 378,153 lekë |
| Example No. 16 - Purchase value of buildings obtained free of charge from the ECB | |
| Individual AA, residing in Lezhë, a political persecutee, with the purchase agreement dated 23.2.2002, benefited from a free apartment of 98 m² from EKB.2, which was registered with DVASHK in 2008. The year of first acquiring ownership title for this property is 2001. On 17.1.2024, individual AA signs a sales contract with individual BB, to whom they sell the house for the value of 5,700,000 ALL. | |
| Value for sale | To determine the sale value, we compare the apartment's reference price with the value in the sales contract: We calculate the sales value at the reference price: 98 meters2 x (56,000 lekë/m2 – 1% * 22 years of use * 56,000 lek/month2) 4,280,640 leks Since the value according to the sales contract is greater than the value according to the reference prices, the value from the sales contract of 5,700,000 ALL (sale value) is taken as the sale value for tax calculation. |
| Purchase value | The purchase value for the apartment, which does not have a defined purchase value (as it was received for free), is equal to the value according to the cost of the year in which the asset was registered in DVASHK (cost of the year 2008): 98 meters2 x 33,745 lekë/m2 = 3,307,010 Albanian Lek |
| Calculated tax | The tax that seller AA must pay is: (sale price – purchase price) × 15% (5,700,000 lek – 3,307,010 lek) × 151 TP3T = 358,949 lek |
| Example #17 – Purchase value of buildings acquired from the EKB with homeless status | |
| The National Housing Authority (NHA) in the city of Bilisht, in 2015, sold a dwelling with an area of 98 m² to individual AA.2 Under a sales contract dated July 11, 2015. The year the title to this property was first acquired is 2014. The contract states that the apartment's value, according to EKB's expenses, was 1,800,000 lekë. Since individual AA, according to the contract, has homeless status, 30% of the apartment's value, i.e., 540,000 lek, will be waived, and the final amount that individual AA must pay to the EKB is 1,260,000 lek. In 2024, individual AA decides to sell his apartment and, by the sales contract dated April 22, 2024, sells it to individual BB for 3,430,000 lekë. | |
| Value for sale | To determine the sale value, we compare the apartment's reference price with the value in the sales contract: We calculate the sales value at the reference price: 98 meters2 x (35,000 leks/sq m)2 – 1% * 9 years of use * 35,000 lek/month2) = 3,121,300 Albanian Lek Since the value according to the sales contract is greater than the value according to the reference prices, the value according to the sales contract of 3,430,000 ALL (sales value) is taken as the sales value for tax calculation. |
| Purchase value | The purchase value of the residence purchased from EKB under the sales contract dated July 11, 2010, is the amount actually paid by individual AA after the 30% discount granted, namely 1,260,000 lek. |
| Calculated tax | The tax that seller AA must pay is: (sale price – purchase price) × 15% (3,430,000 lek – 1,260,000 lek) × 15 % = 325,500 lek |
6.4 Forced sale of real estate by public legal persons or entities equated with them (bailiff's office)
The cases of forced sale of real estate by public legal entities or entities equivalent to them (bailiff's office), when the sale procedure is provided for by legal and sub-legal acts, are not subject to the provisions of this instruction.
| Example No. 18 – Forced Sale of Real Estate by Public Legal Entities or Entities Equal to Them (Enforcement Office) | |
| Individual AA owns an apartment with an area of 89 sq m.2, which he mortgaged to the bank for a loan taken from “Zeta” bank in the amount of 1,000,000 lek. Individual AA, the borrower at the bank, cannot repay the loan, which by December 2014 had reached the amount of 3,500,000 lek. The bank, through a court decision dated January 5, 2024, put the debtor AA's apartment up for auction. Through the auction, the bank sells the property to individual BB for the amount of 4,000,000 lek, of which it collects 3,500,000 lek into its account and returns 500,000 lek to debtor AA. | |
| Sales excluded | The sale of the apartment of individual AA, made by the bank at auction, is not subject to personal income tax on the transfer of ownership. |
6.5 The division of jointly owned property is subject to taxation, according to this directive, only in cases when one of these two conditions is met:
a) from the division of property in nature, inequality of shares is created, according to the meaning of Article 207 of the Civil Code; and
b) the value of compensation for ideal shares after division, for co-owners who do not participate in the property in kind, is greater than the value of these ideal shares at the time of creation of the co-ownership.
6.6 Sales/gifts/exchanges or disposal of immovable properties by legal persons according to the provisions of Chapter II of the Civil Code are not subject to the provisions of this instruction.
6.7 Mediation agreements according to the provisions of law no. 10385/2011, “On Mediation in Dispute Resolution,” as amended, for the transfer of ownership rights of immovable properties between individuals, are subject to the provisions of this instruction.
CHAPTER III
DEED OF TRANSFER OF OWNERSHIP RIGHTS
1. Capital gains tax on real property is paid by the individual transferring ownership of the real property. Only in cases of inheritance, gift, and waiver is this tax paid by the individual acquiring ownership of the real property.
2. The local directorates of the State Cadastre Agency (LDASCA) calculate and collect the relevant tax liability, according to the procedures established by law and this instruction. Payment of the tax liability is made before the registration of the act of transfer of ownership of real estate is carried out, at LDASCA, in accordance with legal acts. LDASCA collects the alienation tax for the transfer of ownership of real estate and remits it by the 20th of the following month to the account of the tax authority.
3. By the 20th of each subsequent month, DVASHKs send the evidence (manual or electronic) to the Regional Tax Directorate, which summarizes the name of the taxpayer and the calculated amount of income tax from the transfer of ownership.
4. In cases of sale with reservation of title, as provided for in Articles 746-749 of the Civil Code, the tax on the transfer of ownership of immovable property shall be paid at the time the last installment of the contract price is paid (fulfillment of the condition), as evidenced by a notarized declaration between the parties, unless the parties voluntarily request the transfer of ownership at the time of signing the contract (before the conditions are met), the tax shall be paid at the time the deed is submitted for registration in the Cadastre Office, regardless of when the last installment payment is due.
CHAPTER IV
FINAL WILL
1. Upon the entry into force of this directive, directive no. 29, dated 30.07.2018, “On the tax on the transfer of immovable property,” as amended, is repealed.
2. The State Cadastre Agency is tasked with implementing this instruction.
This instruction enters into force upon the commencement of the effects of Law no. 29/2023, “On Income Tax,” as amended.
Minister of Finance and Economy
Ervin Mete
DIRECTOR GENERAL OF THE STATE CADASTRE AGENCY
Swallow Bici
ANNEX NO. 1: Indexing of agricultural land prices with annual average inflation
| Years | Average inflation | Intermediate coefficient | The Index 2011 |
| 1989 | |||
| 1990 | 1.8 | 1.0183 | 37.817 |
| 1991 | 104.5 | 2.0450 | 18.492 |
| 1992 | 236.6 | 3.3656 | 5.494 |
| 1993 | 30.9 | 1.3089 | 4.198 |
| 1994 | 15.8 | 1.1580 | 3.625 |
| 1995* | 6.0 | 1.0601 | 3.419 |
| 1996 | 12.8 | 1.1276 | 3.032 |
| 1997 | 32.9 | 1.3294 | 2.281 |
| 1998 | 21.6 | 1.2163 | 1.875 |
| 1999 | 0.4 | 1.0040 | 1.868 |
| 2000 | 0.1 | 1.0005 | 1.867 |
| 2001 | 3.1 | 1.0313 | 1.810 |
| 2002 | 5.2 | 1.0522 | 1.720 |
| 2003 | 2.4 | 1.0237 | 1.680 |
| 2004 | 2.9 | 1.0287 | 1.634 |
| 2005 | 2.4 | 1.0237 | 1.596 |
| 2006 | 2.4 | 1.0237 | 1.559 |
| 2007 | 2.9 | 1.0294 | 1.514 |
| 2008 | 3.4 | 1.0336 | 1.465 |
| 2009 | 2.3 | 1.0228 | 1.432 |
| 2010 | 3.6 | 1.0356 | 1.383 |
| 2011 | 3.5 | 1.0345 | 1.337 |
| 2012 | 2.0 | 1.0204 | 1.310 |
| 2013 | 1.9 | 1.0194 | 1.285 |
| 2014 | 1.6 | 1.0163 | 1.265 |
| 2015 | 1.9 | 1.0188 | 1.241 |
| 2016 | 1.3 | 1.0128 | 1.226 |
| 2017 | 2.0 | 1.0201 | 1.202 |
| 2018 | 2.0 | 1.0203 | 1.178 |
| 2019 | 1.4 | 1.0141 | 1.161 |
| 2020 | 1.6 | 1.0162 | 1.143 |
| 2021 | 2.0 | 1.0203 | 1.120 |
| 2022 | 6.7 | 1.0672 | 1.049 |
| 2023** | 4.9 | 1.0495 | 1.000 |
Note.
- For the years 1990-1995, the end-of-year inflation rate was used in the absence of data for the average inflation rate.
For the year 2023, the average annual inflation rate from January-October 2023 was used (the last update of these indices was carried out on December 6, 2023).
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Source: Official Publications Center.