Acquisition of shared property within 10 years - speculation and gift tax
January 12, 2022 | 40,00 EUR | answered by Steuerberater Bernd Thomas
Hi everyone,
I currently own a condominium together with my uncle. The ownership shares are divided equally (50/50). We acquired the condominium in September 2017 for a purchase price of €400,000 (€200,000/€200,000). Now I would like to take over my uncle's share. We have agreed on a purchase price of €220,000. Now, we are within the first 10 years after acquiring the property, which means that the tax office can levy a capital gains tax. If I am informed correctly, this capital gains tax will be levied on the profit margin of €20,000. Deductible costs can be deducted from this (notary fees, real estate transfer tax, costs for land registration, broker fees, repair/modernization costs, etc.). Since the acquisition of this property, my grandfather and his wife have been living in this condominium (if relevant).
My questions to you are: Have I correctly assessed the situation above? Will a capital gains tax be due for my uncle upon sale?
What if we set a selling price of €200,000? Would this tax also be incurred?
The market value of this condominium is estimated to be higher. Is it possible that the tax office will also levy a gift tax for the difference?
And are there possibly reasons that justify the purchase price of €220,000 and that the tax office cannot levy a capital gains tax?
Thank you and best regards,
Max
Dear questioner,
I am happy to answer your inquiry based on the information provided in the initial consultation on frag-einen.com. The response is based on the factual information provided by you. Missing or incorrect information can affect the legal outcome.
1. The profit is calculated as follows: Sales price (€220,000) minus acquisition or production costs (€200,000, plus proportional acquisition incidental expenses) minus deductible expenses (e.g. notary fees, if paid by the uncle). Any claimed depreciations from rental income may also need to be added. For details, see § 23 (3) of the Income Tax Act.
2. If the selling price is reduced accordingly, the profit will also be lower, possibly 0.
3. If the sale is below the market value, it constitutes a partially paid transfer, and the part transferred without consideration (difference between sales price and market price) is subject to gift tax. Due to low tax-free allowances, taxation is expected in this case.
4. If the price is below the market level, it must be justified to avoid gift tax. Factors reducing value could include encumbrances such as a registered right of residence or usufruct.
Best regards,
Bernd Thomas
Tax Advisor
Information according to DL-InfoV: Tax Advisor Dipl.-Kaufmann (FH) Bernd Thomas, Tax Advisor, Jöhrensstraße 1, 30559 Hannover, member of the Tax Advisor Chamber of Lower Saxony, membership number 146580, professional liability insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, insurance sum: €250,000 for each individual claim; annual maximum benefit: €1,000,000 (for all claims in one insurance year); The professional regulations apply, especially the Tax Advisory Act (StBerG), implementing regulations to the Tax Advisory Act (DVStB), professional code (BOStB), Tax Advisor Remuneration Ordinance (StBVV) (regulations can be viewed at: https://www.berufsrecht-handbuch.de/, http://www.gesetze-im-internet.de/stberg, www.gesetze-im-internet.de/stbvv/), the professional title Tax Advisor was awarded in the Federal Republic of Germany.
