The Ministry of Finance (MoF) has issued the Decision No. 990/1 dated 28/11/2019 (here below) which amended article 19 of the Decision No. 517/1 dated 17/04/2018 relating to the implementing provisions of article 45 of the Legislative-Decree No. 144/1959 (Income Tax Law) as follows:
- Capital gains resulting from the transfer of a real estate property or part of it or units or shares of said property situated in Lebanon and held by the persons mentioned in article 18 of said Decision are subject to a tax of 15%, and thus, for transfers executed as of October 27, 2017.
- The capital gain resulting from the transfer of a real estate property or part of it or units or shares of said property is defined as the difference between the acquisition price and the selling price, thereafter, and in order to determine the taxable base, a deduction of 8% of the capital gain shall be applied per year from the date of acquisition to the transfer date and no other deduction shall be applied.
Consequently, the capital gain shall be exempted from tax in the event that the real estate property is held by the transferor for more than twelve (12) years, even if the transfer occurred at the beginning of the thirteenth year.
- In order to calculate the capital gain referred to in clause 2, and consequently determine the taxable base, the following shall be adopted:
- The date of acquisition shall be determined according to the following:
- Concerning real estate properties or units or shares of real estate properties transferred by inheritance: The date of death of the deceased is considered to be the date of acquisition by the heir, unless there is a legal dispute relating to the determination of the heirs, in such case the date of the judgment determining the heirs will be considered the date of acquisition.
- Concerning real estate properties or units or shares of real estate properties transferred by gift: The signature date of the gift by the donor and the donee before a notary is considered to be the date of acquisition by the donee if the contract was not recorded on the certificate of the land register or the date of registration in the land register if the contract was thereto registered.
- Concerning real estate properties or units or shares of real estate properties transferred by will: the date of the judgment attesting the death and execution of the will is considered to be the date of acquisition by the legatee.
- Concerning real estate properties or units or shares of real estate properties transferred by virtue of notary sales contracts: In the event of a legal dispute over the acquisition: the date of the judicial judgment attesting the acquisition is deemed to be the date of acquisition.
- The acquisition price is determined based on the following:
- If the acquisition results from an inheritance (will, gift, etc.), the acquisition price is equal to the estimated valuation for the purpose of completing the inheritance file before the units in charge of the inheritance tax.
- If the acquisition results from a purchase, the acquisition price is equal to the value recorded on the certification of the land register or the date set in the purchase contract if the latter is not registered in the land register.
- If the property is built by the owner at a later date than the date of acquisition, a distinction shall be made in this context between the situation in which the owner does not have justification documents supporting the construction cost, whereby the capital gain resulting from the transfer is subject to a tax of 15% tax of the selling price; While for the situation in which the owner does have justification and supporting documents, the construction cost is added to the property’s price in order to determine the acquisition price, and the taxable base shall be determined after a deduction of 8% of the capital gain (difference between the selling price and the acquisition price) that should apply per year from the date of the last document certifying the construction cost till the date of the transfer agreement.