House sale - speculation period/reassessment of taxes
July 21, 2009 | 35,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
In the course of a possible house sale, no tax disadvantages should arise and therefore some questions arise.
Background information:
The house has been in family ownership since 1956 as a property with leasehold land. In 1999, the mother dies and leaves the property to her two daughters in equal parts. In January 2000, the inheritance is accepted and the entry in the land register is made in March 2000. One sister buys out the other, making it sole ownership in April 2000. In June 2000, the leasehold land is purchased.
The current owner has been claiming tax deductions for the property since 2000. It has been renovated and rented out since May 2002.
Now a sale could take place and the following questions arise.
- Does the property fall under the speculation period (usually in the case of inheritance and thus gratuitous acquisition, the ownership periods of the previous owner count)?
- Does the payout to the sister play a role in this regard?
- Does the purchase of the land play a role?
Two questions are actually crucial:
1. From when can a sale take place without triggering the speculation period. Since the house/land was never acquired as a complete object, what value would have to be used in the case of the speculation period?
2. From when can a sale take place without resulting in a tax repayment or repayment of the tax benefits claimed (depreciation of the renovation and maintenance regarding rental and leasing, etc.).
With best thanks and kind regards.
Dear inquirer,
First of all, 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. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The taxation of the proceeds from the private sales transaction generally applies to the entire sale. Whether individual components are not subject to speculation taxation is to be assessed in relation to the acquisition circumstances.
In principle, a sale is not tax-relevant if the acquisition, or the acquisition by the predecessor in title, took place more than 10 years ago and was made free of charge by the predecessor in title. Furthermore, the proceeds are not taxable if there has been self-use in the years before the sale.
Therefore, the sale can only be tax-free if these conditions are met. Only the part of the building acquired by inheritance in 2000 is outside the speculation period. The part of the building acquired by the sister, along with the compensation payment, is considered acquisition costs and part of a taxable sales transaction. The same applies to the land acquired in 2000.
The speculation period must be calculated separately depending on the acquisition of the part of the land. The date of the purchase or sale contracts (mandatory legal transactions) is decisive for the period. There must be a period of more than 10 years between these contracts.
It should also be noted that the depreciation claimed up to the sale must be deducted from the acquisition costs.
According to the description of the situation, the purchase contract for the leasehold land should be crucial for the earliest possible time of tax-free sale, as it was the last to be acquired.
In my opinion, there should be no refund of tax benefits regarding expenses from previous years, as the maintenance costs are not related to the sale. The recapture of depreciation only occurs in connection with transactions to be avoided.
I hope that this information has provided you with a sufficient overview of the situation and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant
