Capital gain on the sale of jointly inherited properties
November 1, 2012 | 35,00 EUR | answered by Dr. Yanqiong Bolik
1. Around 1970 construction of a commercial hall on own land for the purpose of rental.
2. In 1980, the son of the builder inherits the hall.
3. On 12.06.2002, the son passes away. Since no will exists, the legal inheritance applies. The new owners of the hall are therefore the wife at 1/2 and the four children at 1/8 each in a community of heirs.
4. On 21.08.2009, the hall is auctioned off and acquired by two of the children for a price of 150,000 euros.
5. On 30.09.2011, the hall is sold to a third party for a price of 205,000 euros.
I acquired the hall jointly with my brother in the auction. We were already co-owners at 1/8 each before the auction. I am interested in determining the basic realization gain. Depreciation/advertising costs, etc. can therefore be excluded for now.
My questions:
a) Will there be a taxable realization gain, and how much is it or how is it calculated?
b) How will a realization gain affect us tax-wise (e.g. according to individual income tax rate or flat taxed)?
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into account your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of the information can alter the tax result.
Based on the information provided, I assume that the property in question is always held in private assets (either in yours or the deceased's) and is not used for personal residential purposes. Please inform me if this assumption is incorrect. The tax implications could change.
a) Is there a taxable capital gain?
Regarding the inherited part of the property (1/8), there is no recognizable compensatory acquisition process according to your description. Therefore, your acquisition date is 1970. Consequently, the 10-year period according to §23 EStG has expired. Therefore, there is no taxable capital gain for this part of the property.
Regarding the part of the property acquired through partition auction (3/8 for you), the acquisition date is 2009. The sale in 2011 constitutes a private sale transaction according to §23 EStG. The capital gain from this is taxable.
What is the amount of this gain and how is it calculated?
The gain or loss from sales transactions is the difference between the selling price on one hand and the acquisition or production costs and advertising costs on the other according to §23 para. 3 EStG. In your case: 3/8 * selling price (205,000) / 1/2 * acquisition costs (105,000) / selling costs + proportionate advertising costs claimed before the sale.
Here, I assume that the payment of 105,000 EUR is solely for the acquisition of the 3/4 part of the property.
b) How does a capital gain affect us tax-wise (e.g. according to individual income tax rate or flat rate taxed)?
Capital gains increase the taxable income. The taxation is based on your individual income tax rate.
I hope I could be of assistance to you.
If there is still any confusion, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax advisor
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
