capital gains tax
August 8, 2013 | 30,00 EUR | answered by Steuerberater Thomas Textoris
Dear Sir or Madam,
On 26.10.2004, we (a GbR with 3 individuals) purchased 2 multi-family houses and 7 garages as a single unit in a package in Wesseling. In 2011, we bought a multi-family house in Remscheid. So, if we were to sell separately, we would have 4 properties in total.
We are planning the following sales in the coming years and would like to know if this may result in a capital gains tax for us. We definitely want to avoid being considered as conducting business activities.
Garages (entire) approx. 11/2014
2 multi-family houses in Wesseling (individually) approx. 11/2019
1 multi-family house in Remscheid 2021
The sales dates are related to the interest rate lock-in of each property. We would adhere to the 10-year speculation period for all properties. Our main concern is the potential accusation of engaging in business activities.
Best regards
Dear questioner,
In the context of an initial consultation and considering the regulations of this forum, I would like to answer your question.
Please note that a modification of the circumstances may lead to a different solution.
An indication of the existence of a commercial real estate trade is the exceeding of the "three-property limit". The sale of more than three properties within a five-year period is generally considered commercial, provided that the other requirements of § 15 (2) EStG are met. One of the requirements of § 15 (2) is the intention to make a profit. Properties for which no profit is intended from the outset, such as partial sales or free transfers to children, are not included in the "three-property limit".
Properties within the scope of the "three-property limit" are only those where there is a close temporal connection between construction, acquisition, or modernization and sale.
A close temporal connection no longer exists if more than 5 years pass between acquisition and sale.
In summary, more than three properties would need to be sold within 5 years, with the period between acquisition and sale not exceeding 5 years.
In your case, although more than 3 properties were sold within 5 years in 2014 and 2019, the acquisition of the 7 garages and 2 family houses was 10 and 15 years ago, respectively!
Therefore, a commercial real estate trade will not be present.
Sincerely,
Thomas Textoris
Tax advisor
