Do I have to pay taxes on profits from the sale of commercial real estate?
January 16, 2024 | 50,00 EUR | answered by Mia Pilz
Dear Tax Advisor,
my name is Fanni Eckstein and I am the owner of a commercial property that I would like to sell. Over the past few years, I have invested a lot of time and money in renovating and modernizing this property, which has significantly increased its value. Now, I am about to sell it and expect to make a substantial profit.
My question is: do I have to pay taxes on the profits from the sale of this commercial property? I am concerned that I will have to give a large portion of my profit to the tax office and would like to know if there are ways to minimize the tax burden.
I am aware that taxes on real estate gains are generally applicable in Germany, but I am unsure of how high the tax burden will be and if there are any exemptions or tax reliefs that could apply to my specific situation.
I would greatly appreciate it if you could provide me with information on the tax aspects of selling commercial properties and suggest possible solutions to optimize my tax burden.
Thank you in advance for your assistance.
Sincerely,
Fanni Eckstein
Dear Mrs. Eckstein,
Thank you for your inquiry regarding the taxation of profits from the sale of your commercial property. It is understandable that you are concerned about how high the tax burden will be when selling and whether there are ways to minimize it. I am happy to provide you with some information on the tax aspects related to the sale of commercial properties.
In general, profits from the sale of real estate in Germany are subject to income tax. It is important to note that the amount of tax on the profit depends on how long you have owned the property. If you have owned the property for more than 10 years, usually no tax is due on the profit. This is known as the speculation period.
However, if you have owned the property for less than 10 years, the profit is considered a private sale and must be taxed. In this case, the profit is taxed at your personal income tax rate. There are exemptions that you can claim to reduce the tax burden.
It is also important to note that there are certain exceptions and tax reliefs that may apply to your specific situation. For example, renovation and modernization costs that you have invested in the property can have a tax-reducing effect. It is advisable to keep all relevant documents and receipts to be able to claim these costs when selling.
To optimize your tax burden, I recommend contacting a tax advisor early on. An experienced tax advisor can analyze your individual situation and offer you tailored solutions to minimize your tax burden.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Mia Pilz
