Determining the value of land and property for a condominium ownership.
April 15, 2015 | 35,00 EUR | answered by Anton Pernitschka
Hello, I am currently in the process of purchasing a condominium and negotiating the details for the purchase contract. Since I could imagine renting out the property in the future after a period of owner occupancy, I am wondering if it makes sense in terms of depreciation in case of rental to separately specify the land price in the purchase contract. As I am interested in maximizing the depreciation value, I would like to keep the value for the land as low as possible in the purchase contract. Using the "Guideline for the allocation of a total purchase price for a developed property (purchase price allocation)" from the Federal Ministry of Finance, I have already determined appropriate values using the tax office's method. Initially, a total value of €100,000 is determined, with the land value set at €13,000 (13%). However, the actual purchase price is €130,000 + acquisition costs. What can I safely set as the value for the land? The €13,000, or 13% of €130,000, which is €16,900? Or can I even set it slightly lower than €13,000?
Dear inquirer,
In the context of an initial consultation and your fee commitment, in accordance with the regulations of this forum, I would like to answer your question.
According to the Federal Fiscal Court decision of 10.10.2000, BStBl II 2001, 183, a total purchase price for a developed property should be divided based on the ratio of the market values or partial values of the land on one hand and the building on the other.
The purchase price allocation is based on the provisions of the market value determination based on the Building Code (asset value method according to real estate valuation). This is a qualified estimate, which is expertly justified and rebuttable.
In the valuation of real estate, land value indices are also used as a secondary measure to determine the land value if it cannot be determined through the comparison value method. The basis for this is the purchase price collections maintained by the property valuation committees.
From the facts presented, no conclusions can be drawn about a "safe" land value.
If a "realistic" land value is agreed upon in a purchase contract, the tax office will likely also accept this value.
The response was provided based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Sincerely,
Anton Pernitschka
Tax Advisor
