What is considered to be realisation?

The rules concerning tax obligations for gains and deduction entitlement for losses apply upon the sale and other realisation of property. The rules concerning "sales" explained in this brochure therefore also apply to other forms of realisation. A property is deemed to have been realised upon cessation of ownership or transfer of ownership to another party through, for example:

  • voluntary sale, including sale at a reduced price where the fee is not symbolic
  • compulsory sale, e.g. expropriation, sale of a farm to another family member or sale at a compulsory auction
  • exchange of real property
  • complete destruction, e.g. by fire.

However, some forms of property transfer are not considered realisation, e.g.:

  • transfer as a gift or advance on inheritance
  • transfer through inheritance in the event of death
  • division of a decedent estate
  • transfer between spouses
  • division of joint property between spouses. 

Ask the tax office if you are unsure.

When is a property considered to be realised?

The time at which a property is considered to be realised (sold) is important in connection with the calculation of the seller's period of ownership and period of occupancy. In the calculation of period of ownership, an agreement concerning realisation will also be of importance. See the section entitled "Tax-free gains on the sale of housing".

If the realisation takes place through sale or exchange, the property is considered to have been realised at the time a complete agreement concerning the transfer is entered into. An agreement is considered to be complete when the buyer and seller have agreed, with binding and final effect, that the property is to be transferred and the key conditions that are to apply. The time of realisation will therefore normally be the day on which the offer is accepted.

Even if realisation in the form of sale is completed, the seller will be considered to be the "owner" through until the ownership is actually transferred to the buyer. This normally takes place upon take-over of the property. Until this time, it will therefore be the seller who, for example, must pay tax on capital and any income from the property.