Ask a tax advisor on the topic of Other questions to tax advisors

The text translates to: Speculation tax

November 23, 2019 | 35,00 EUR | answered by Steuerberater Knut Christiansen

Hello,

I have an urgent question regarding the speculation tax.

My father, who passed away in 2018, jointly purchased an apartment with my mother in 2004 for 240,000€, which was rented out to my grandmother. In their divorce in 2010, my father acquired my mother's 50% share of the apartment. In the upcoming division of inheritance with my two siblings according to statutory succession, my brother will take over the apartment along with the remaining loan of 63,000€ and will pay my sister and me 89,000€ each. This amount includes my sister and I giving our brother 20,000€ each as a gift to stay within the tax exemption limits for gift tax. The calculated value of the apartment is 390,000€.

The notary has now informed us that my sister and I would likely incur speculation tax in this case, as the acquisition of my mother's 50% share was less than 10 years ago.

1. Question: What options are there to avoid speculation tax other than delaying the division of inheritance by a year? I read about the possibility of changing the land registry early and only delaying the notarization by a year. Would this not also need to be notarized? In this case, when would the money need to be transferred to avoid all tax pitfalls?

2. Question: What amount does the speculation tax refer to? Value of the apartment (390,000) - purchase price (240,000)? How is the remaining loan (63,000) taken into account here? Can depreciation be claimed? If so, up to what point? In the case mentioned earlier, would my sister and I each have to pay taxes on 1/3 (390K-240K) = 50K at our personal tax rate?

Thank you,

Kind regards.

Steuerberater Knut Christiansen

Good day,

I would like to answer your questions within the scope of an initial consultation as follows:

1. In my experience, a change in the land register can only be done notarially. Therefore, in my view, there is no way to avoid taxation if the transfer is to take place this year.

2. Initially, three siblings each inherited a third of the house. Half of this (the father's share) is no longer subject to the speculation period. Now, 2 siblings are selling their share of the other half. This amounts to:

390,000€ x 50% x 1/3 = 65,000€

The sale is at 110/130 on a paid basis, so the sale price would be 55,000€ (110 is derived from 89,000€ plus the assumption of the proportional loan of 21,000€).

The proportional acquisition costs would then need to be deducted at 110/130 as well:

240,000€ x 50% x 1/3 x 110/130 = 33,846€

Therefore, in my view, the capital gains per sibling's share amount to 21,154€.

Selling costs could still be deducted if they were to be paid by the siblings. Depreciation cannot be claimed.

I hope this answers your questions, otherwise feel free to ask for further clarification at no cost.

I would like to point out that this forum cannot replace personal advice. Missing or incomplete information on the facts can alter the legal outcome.

Sincerely,

Knut Christiansen
Tax advisor