How does the taxation work when selling a property?
March 6, 2023 | 50,00 EUR | answered by Tina Ullmann
Dear tax advisor for real estate taxation,
I am currently facing the decision to sell my property, but I am unsure about how the taxation in this case will proceed. I bought the property several years ago and have been living in it myself. Now I want to sell it to buy a new apartment.
My main concern is to find out how high the taxes on the sales proceeds will be and if there are ways to minimize these taxes. I have heard of various tax regulations, but I am unsure which ones are relevant to my specific case.
I am also unsure if I need to provide certain documents or information in order to correctly carry out the taxation of the sale. I am also interested in knowing if there are any tax benefits or savings opportunities that I could take advantage of in my real estate sale.
Could you please explain in detail how the taxation works when selling a property and what steps I need to take? Are there ways to minimize or optimize the taxes? What documents do I need and what legal regulations are relevant in my case?
I thank you in advance for your support and look forward to your professional advice.
Sincerely,
Tina Weise
Dear Mrs. Weise,
thank you for your inquiry regarding the taxation of selling a property. I understand that this is a complex topic that can raise many questions. I would be happy to explain in detail how the taxation could proceed in your specific case and what steps you should take.
First and foremost, it is important to know that selling a self-occupied property is usually tax-free if you have used the property for at least two years. This applies to both single-family and two-family houses. If you sell the property within this period, you may have to pay taxes on the capital gain. This gain is calculated as the difference between the selling price and the original purchase price of the property.
In order to calculate the taxes on the capital gain, you will need various documents, such as the purchase contract of the property, all receipts for investments made in the property (e.g. renovation and modernization costs), as well as evidence of depreciation and financing costs. These documents are important to correctly carry out the tax treatment of the sale.
There are also ways to minimize the taxes on the capital gain. One possibility would be to reduce the tax burden through so-called deductible expenses. These include costs related to the sale of the property, such as real estate agent fees, notary fees, or the cancellation of mortgages. These costs can be deducted from the capital gain, which can lead to a reduction in the tax burden.
Furthermore, there are also tax benefits that you could take advantage of in your property sale. For example, you could benefit from the so-called speculation period if you have owned the property for more than ten years. In this case, the capital gain would be completely tax-free.
In summary, the taxation of selling a property depends on various factors and it is important to have all relevant documents and information available in order to correctly carry out the tax treatment. I am happy to answer any further questions you may have and support you in your property sale.
Best regards,
Tina Ullmann, Tax Advisor
