Ask a tax advisor on the topic of Income tax return

Taxation from capital gains on the sale of real estate

April 15, 2021 | 25,00 EUR | answered by Steuerberater Knut Christiansen

I own a property for more than 10 years.

On the property, I want to build a semi-detached house as a private individual and keep one half and sell the other half with the intention of making a profit.

Is the difference between the selling price of the semi-detached house minus the acquisition costs/construction costs for the sold semi-detached house minus the value of the land of the sold semi-detached house (land is divided/surveyed) subject to income tax?

Or is the sale completely tax-free, since the newly built semi-detached house being sold is constructed on a property that I have owned for over 10 years?

Best regards

Steuerberater Knut Christiansen

Good morning,

I am happy to answer your question as part of an initial consultation and taking into account the fee (I receive 50% share).

In principle, the sale would be tax-free according to § 23 EStG, as there is a period of more than 10 years between the purchase and sale of the land. The subsequent development does not create a new deadline here.

However, there is a residual risk that the tax office could see this as a commercial activity, so that the profit could then be taxed according to § 15 EStG. A commercial real estate trade can also exist in exceptional cases if less than 3 properties are sold (see BMF letter on commercial real estate trade under point 7: https://datenbank.nwb.de/Dokument/Anzeigen/129733/).

Therefore, it might be advisable to request a binding statement from the tax office beforehand.

Please note that this forum only allows for an initial tax assessment. Missing or incomplete information can alter the legal outcome.

Kind regards,

Knut Christiansen
Tax advisor