Double real estate transfer tax?
February 19, 2010 | 25,00 EUR | answered by Matthias Wander
Hello,
my mother would like to sell your house.
It is located on a plot of land that is separated from neighbors by a fence.
However, the entire property of our house and that of the neighbors has not been divided yet. (meaning one single property in the land register)
The plot + house of my mother was an inheritance at that time.
The current owner of the neighboring property agrees to the division. However, he does not want to cover the costs.
Upon inquiry with our notary, it was now said that my mother may have to pay real estate transfer tax in the amount of about 12,000 euros after the division.
Since there is already a potential buyer (who of course only wants to buy the divided property), the question arises for me whether this could not be solved differently.
For example, with a simultaneous division and transfer to the buyer, so that only the new owner would have to pay the real estate transfer tax.
What is the cheapest possible solution?
Best regards, Mario Knab
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your involvement in an initial consultation.
According to § 7 GrEStG, when a property is divided, the tax is not levied to the extent that the value of the partial property corresponds to the co-ownership share. The condition is that the purchase of the partial property share was more than 5 years ago. In plain terms, this means that if the value of the partial property that your mother receives after the division is higher than the value of the share in the total property before the division, real estate transfer tax will be levied for the difference, as there is a property acquisition to that extent.
Here is an excerpt from the legal text:
§ 7 Conversion of joint ownership into area ownership
(1) If a property owned by several co-owners is divided into separate areas, the tax is not levied to the extent that the value of the partial property received by the individual acquirer corresponds to the fraction to which they are involved in the total property to be distributed.
(2) If a property owned by a partnership is divided into separate areas by the partners involved in the partnership, the tax is not levied to the extent that the value of the partial property received by the individual acquirer corresponds to the share to which they are involved in the partnership's assets. If a property is divided into separate areas upon dissolution of the partnership, the distribution ratio is decisive if the partners have agreed on a distribution ratio different from the participation ratio in case of dissolution of the partnership.
(3) The provisions of paragraph 2 do not apply to the extent that a partner - in the case of succession, their predecessor - acquired their share in the partnership within five years before the conversion by a living transaction. Furthermore, the provision of paragraph 2 sentence 2 does not apply to the extent that a distribution ratio different from the participation ratio was agreed within the last five years before the dissolution of the partnership.
I hope this gives you an initial overview.
Kind regards,
Wander
Tax consultant
