Barter and purchase and sale are contracts that make it possible to negotiate real estate. Both contracts are well known and used. Find out the differences.
If you want to exchange your home, the process is not exclusively through traditional buying and selling. The exchange has advantages compared to traditional buying and selling, especially in terms of tax savings.
Swapping and buying and selling are contracts that make it possible to negotiate real estate. Both contracts are well known and used.
Simply put, a home exchange is an exchange of real estate between two owners, settling the differences in value between the properties. Selling to buy a house again represents a big investment of time and money, and, in addition, bartering can have tax advantages.
So when it comes to the differences between home exchange and home sale, tax savings definitely stand out as the distinguishing factor.
Apparently it is very simple to differentiate what is a barter contract from what is a real estate purchase and sale contract, however there are situations in which confusion can be made and using one contract in place of the other.
Exchange
The exchange of real estate is nothing more than a property being given in exchange for another property.
There are two types of exchange:
- Exchange of real estate without making it: this is the exchange popularly known as “pau a pau” exchange, it is the exchange of real estate of the same value. Because they are of the same value, there is no need to supplement the amount.
- Exchange of properties with renovation: It is the exchange of properties of different values and that require the supplementation of the amount. Therefore, in addition to the property is delivered a cash amount.
Exchange with cash or purchase and sale
The exchange consists of the situation in which the parties exchange properties between themselves, and the purchase and sale is the business in which one of the parties gives the money in exchange for receiving the property.
The problem of differentiating one contract from the other appears when there is money and real estate involved in the deal. Depending on the context, it can be a barter deal with escrow or a purchase and sale with real estate as part payment.
Barter with exchange
- When the value that is given in cash is less than 50% of the value of the deal, we are faced with an exchange for cash.
Purchase and sale with real estate as part payment
- If in the business there is the delivery of a property and an amount of money that corresponds to or exceeds 50% of the business value, we are facing a purchase and sale in which the property is delivered as part payment.
Advantages of the exchange
Exchanging a house instead of selling it to buy another one has many advantages, although it is not always easy to perform a housing exchange.
First of all, to certify it, you need to be a homeowner. Next, you need to find another owner with whom you can actually make the exchange and whose house exactly matches all your needs.
Although this business can be done directly between two owners, in recent years real estate agents have developed tools that make this process easier.
#1. Procedures and bureaucracy
Compared to the traditional sale of a house, the exchange has advantages, not only from the fiscal point of view, but also in terms of administration and bureaucracy.
In fact, selling and then buying is usually a lengthy process, and when it finally takes place, it can involve a lot of paperwork.
The exchange, on the other hand, is materialized by a promissory contract signed by both parties, in which they simultaneously take on the position of seller and buyer, saving on notary fees. In this contract the values of both properties are also identified. This is a more direct and immediate process.
Until the signing of the deed, both parties only need to inform their respective banks to proceed with the transfer of the mortgaged property and the provisional registrations of the new mortgages.
At the time of the deed, each of the banks will deliver a distrain of each of the houses.
#2. Paying taxes
One of the main differences between exchanging and selling a house has to do with the payment of taxes, namely the payment of the Municipal Tax on Real Estate Transactions (IMT) and the Stamp Tax.
When you buy a property, the IMT is calculated based on the total value of the deal, unlike what happens in the exchange, in which the IMT and Stamp Tax are levied only on the difference in value between the properties.
If you are buying the property with the higher value, you will only pay these two taxes for the difference in value. And if this difference is less than 92.407€ you will be exempt from IMT. Whoever buys the house of lesser value, does not have to pay IMT.
