Ask a tax advisor on the topic of Income tax return

tax-free amount of sales proceeds

March 5, 2012 | 40,00 EUR | answered by Michael Herrmann

I am a non-typical shareholder with stakes in a real estate leasing fund. In 2009, parts of the properties were sold, resulting in a taxable income of approximately Euro 30,000 for me, which now affects my 2009 tax return. I have received a revised notice from my tax office. I have filed an objection and wanted to take advantage of the possibility of an exemption according to § 16 (4) EStG. The conditions are met as I had reached the age of 55 at the time of the sale (1.11.2009). The tax office informed me that this is a subsequent decision and I would have to challenge the main decision. The fund company informed me as follows:

"The exemption from § 16 (4) EStG is to be applied to profits from the sale/disposal of entire businesses or parts of businesses. Assuming that the sale of the necessary business assets (WDR-Arkaden) is to be considered as the termination of the Arkaden KG business, any exemptions under § 16 EStG would belong to the DBVL GmbH as a shareholder of the Arkaden KG. This exemption could therefore only be applied proportionally to the investor. Since the taxable profit allocated to DBVL GmbH from the WDR-Arkaden property amounting to EUR 25.6 million was significantly above the threshold of § 16 (4) EStG (EUR 181,000.00), the application of the exemption under § 16 (4) EStG is not possible.

This exemption is a so-called personal exemption, which is granted to each taxpayer only once in their lifetime upon request. Therefore, the request would generally have to be made in your personal income tax return, but this is not necessary in this case."

Is there a possibility to apply the exemption in the income tax return?

Michael Herrmann

Dear questioner,

first of all, thank you very much for your inquiry, which I would be happy to answer based on the information provided and in the context of your involvement in an initial consultation. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.

As you describe the situation, I also see no possibility of receiving the exemption according to § 16 para. 4 EStG.

The exemption is to be granted in the event of the sale or abandonment of a business, part of a business, or a participation under the other conditions. The exemption, as correctly stated in the information provided by the investment company, is only attributable to the directly involved shareholders. According to the facts, this is the DBVL GmbH. Since the exemption is not applicable to the GmbH, there can also be no "passing on" to you. The GmbH is a legally independent entity.

For you, the exemption may be applicable, subject to further commercial sources of income, when you abandon your silent participation in the DBVL GmbH.

I regret that I cannot provide you with a more favorable answer, and I hope that this information has given you a sufficient overview of the situation within the scope of your involvement and this initial consultation.

Sincerely,

Michael Herrmann
Tax consultant
Diploma in Financial Management (FH)