Farm worker's apartment at the Lawi farm
November 24, 2011 | 40,00 EUR | answered by Oliver Burchardt
Good evening.
The residential building in my farm consists of about half living space and the other half operational rooms.
In the 1990s, the entire living area was transferred into private ownership. This involved an on-site inspection followed by documentation by the tax office.
Recorded in the land register and also noted in the documents is a life estate apartment with a specific location, which my parents, who passed away ten years ago, lived in.
This apartment has been renovated and refurbished and is now occupied by my son.
In the last twelve months, we have converted an operational room on the ground floor that was no longer in use into a senior-friendly apartment for my wife and me.
If, after the deletion of the old life estate, the newly built apartment is declared a life estate, will this apartment then remain in the business assets as a life estate?
Kind regards
Dear questioner,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Adding, changing, or omitting information can potentially alter the result significantly.
The new life annuity apartment can no longer be classified as business assets, as the corresponding regulations expired on December 31, 1986. There were transitional regulations in place until 1998, but they are no longer applicable to you. Therefore, the new life annuity apartment becomes necessary private assets and must be excluded from business assets.
However, this does not necessarily mean that you must fully tax the withdrawal gain. The withdrawal of land for the construction of a life annuity apartment is tax-exempt if it is used by the taxpayer themselves. This is the case for you. However, you should seek detailed advice from an agricultural accounting office, as you are not only withdrawing land but also building substance. This withdrawal can also be tax-exempt if there is appropriate documentation (such as proof of the need for renovation). Such advice is difficult to provide within the scope of this forum. Additionally, agriculture and forestry are subject to numerous special circumstances, so I recommend consulting a colleague specialized in this area.
I hope my explanations have been helpful to you.
Best regards,
Oliver Burchardt
Certified Public Accountant
Tax Advisor
