Calculation of real estate transfer tax in the case of a land lease.
May 6, 2015 | 100,00 EUR | answered by Anton Pernitschka
Dear Sir or Madam,
In 05/2013, we acquired a leasehold property (102 condominiums) for a purchase price of 2,000,000 euros. The annual ground rent amounts to 2,000 euros. The remaining term of the ground lease is 39 years.
How high is the real estate transfer tax here or how is it calculated. The tax office in Coburg invoiced us 70,000 euros (3.5% of 2 million).
Subsequently (in 11/2014), we acquired the land from the owner for 394,000 euros. For this, we paid 13,790 euros in real estate transfer tax.
Dear inquirer,
In the context of an initial consultation and your fee commitment, while observing the regulations of this forum, I would like to answer your question.
The amount of real estate transfer tax is determined by the consideration. In the case of purchasing land, this is usually the purchase price; when establishing a land lease, it is the capital value of the ground rent (often 18 times the annual value) as well as any other consideration paid for the establishment of the land lease (e.g. purchase price).
Based on these criteria, in the present case, the capital value of the ground rent would amount to (2,000 € x 16.367 capital value at 39 years =) 32,734 €, in addition, it was stated that a purchase price of 2,000,000 € was paid for the property. Therefore, the basis for calculating the real estate transfer tax would actually be 2,032,734 €.
After acquiring the property from the owner, the tax office should not calculate the real estate transfer tax based on the full purchase price. This is because you are not only paying for the land, but also buying yourself out of the obligation to pay the monthly ground rent. The purchase price must therefore be divided into consideration for the land and residual value of the land lease.
The response was given based on the description of the situation you provided. Missing or incorrect information about the actual circumstances could affect the legal outcome.
Best regards,
Anton Pernitschka
Tax Advisor
