This Is How Property Prices Are Determined By Tax Authorities

The tax authorities have approved a new method for calculating the capital gain resulting from the sale of built and unbuilt properties subject to income tax (IRG), in cases where it is difficult to ascertain the original acquisition price of the property or its construction cost.

This measure aims to facilitate the calculation of taxes on old properties, those resulting from the division of family estates, undocumented transfers, or when the property price does not appear in official documents such as title deeds.

According to the new directive, 40 percent of the sale price will be adopted as an estimated value for the acquisition price or construction cost to calculate the taxable capital gain.

The tax authorities also indicated that any expenses related to acquisition, maintenance, or improvements made by the seller, even if documented, will not be included when adopting this estimated price. This amendment aims to simplify legal procedures and ensure clear compliance from sellers when calculating taxes.

According to a directive issued by the Tax Directorate of the Ministry of Finance on March 04, 2026, bearing the number 09/2026, which “Echorouk” reviewed, the financial authorities clarified the method for calculating the capital gain resulting from the sale of built and unbuilt properties subject to income tax (IRG).

The Ministry directed this circular to the Director of Large Enterprises, regional tax directors, and tax directors at the state level. It was also reviewed by the Inspector General of Tax Services, department heads, and central directors, as part of the implementation of Article 9 of the 2026 Finance Law, which amends Article 78 of the Direct Taxes and Similar Duties Law.

The Ministry explained that the amendments aim to facilitate the process of determining capital gains from property sales, especially in cases where the property is old, results from the division of family estates, or undocumented official transfers, or when the property price is not recorded in official documents such as title deeds, which makes the calculation of taxable capital gains difficult for the tax authorities.

Under the new Article 78 of the Tax Law, if it is not possible to determine the acquisition price or construction cost of the property, an estimated price equivalent to 40 percent of the sale price will be adopted as the basis for calculating the capital gain.

To clarify this mechanism, the circular provided a practical example concerning a built property acquired in 1969, where the acquisition price was not recorded in the title deed, and it is sold for 10,000,000 dinars.

In this case, the estimated acquisition price is calculated as 4,000,000 dinars, which is 40 percent of the sale price. The taxable capital gain then becomes 10,000,000 – 4,000,000 – any legally justified fees, taxes, or expenses at the time of sale.

The Ministry also stressed that expenses related to acquisition, maintenance, or improvements made by the seller, even if justified and documented, will not be included when adopting the estimated price.

The directive indicated that these provisions came into effect starting January 1, 2026, emphasizing the necessity of widely disseminating the circular, ensuring its application by all tax authorities, and promptly informing the Ministry of any difficulties that may arise during implementation.

The circular was signed by the Head of the Legislation, Regulation, and Legal Affairs Department, to serve as an official reference in the procedures for calculating capital gains on properties subject to income tax.