3 Object Limit
December 13, 2013 | 25,00 EUR | answered by Peter Lipp
Dear Sir or Madam,
As we are considering selling a rental apartment and a single-family home next year, the question arises whether we would exceed the 3-property limit. Therefore, here is my question:
The following shares were sold in the last years:
2011: Single-family home 50% husband 50% mother
2013: Single-family home 50% husband 50% wife
2013: Single-family home 50% wife 50% mother
Planned:
2014: Condominium 50% husband 50% wife (rented out)
2014: Single-family home 50% husband 50% wife
None of the properties were "held" for over five years.
Would the 3-property limit be exceeded, as each share is counted as a separate property, or would the 50% share be counted as half a property, meaning we would be below the limit with 2 properties of the wife and 2 properties of the husband (four times half a share)?
Dear inquirer,
Ownership shares are also considered as objects for the determination of a commercial real estate trade. Therefore, the basic requirements for a commercial real estate trade are generally met, especially since there is a close temporal connection between acquisition/manufacture and sale. However, since the three-object limit only has indicative effect, commerciality can be avoided in the presence of valid reasons.
For example, a sale due to an emergency situation resulting in disposal losses could be a reason. A sale demanded by a bank could also be a reason for a forced sale. It is important to question whether such reasons exist for you or if the acquisitions were indeed made with the intention of resale.
If there are private reasons for the sale, this should be clarified with the tax office in advance. It is also important to assess whether commerciality would have significant disadvantages for you. To do this, the trade tax burden and the benefit of offsetting trade tax against income tax would need to be compared with the taxation of sales as speculative transactions.
I am available for further questions.
