Sell two houses in the same year?
March 10, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Dear tax advisor,
please give me advice on how to best proceed, as I am not very knowledgeable about tax matters and find them daunting. I have left my profession, no longer have taxable income, only rental income which I have mostly offset with expenses for caring for my elderly mother. The tax office no longer knows me. I was poor but happy.
I am currently selling the house in which I have lived for 20 years. Sale price = €55,000.
I also have another house, my childhood home, which was transferred to me in 2004. My mother had a usufruct in it until her passing in December 2010. Now I want to sell it (approximately €400,000 minus a €33,000 compulsory share entitlement for my brother after gradual reduction).
A flood of money is coming my way.
Now, my questions:
1. How will the tax office react to these transactions?
2. Approximately how much tax will be involved?
3. From a tax perspective, what is the most sensible course of action; should I perhaps postpone the sale of the childhood home to next year?
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation as follows:
Owner-occupied house
If you have used the entire house exclusively for your own residential purposes either from the beginning or in the last 3 years, there will be no taxable capital gain upon sale, meaning the sale is completely tax-free.
Parental home
A sale will be subject to income tax on the capital gain if you sell the house within 10 years of acquisition. If the house was transferred to you in full in 2004 without charge and your mother was the owner of the house for more than 3 years in 2004, the sale is also tax-free in this case. If you have made additional payments, the amount of the payment constitutes an acquisition, so a proportional capital gain would be taxable. However, there is no indication of this in your description of the situation.
In answering your questions, I have assumed that both properties are part of your personal assets and do not belong to any business assets or agricultural and forestry assets.
I hope I was able to help.
Kind regards,
Ulrich Stiller
Tax Advisor/Diploma in Business Administration
