Real estate purchase Division of property and building in the notarial contract
April 14, 2018 | 50,00 EUR | answered by Steuerberater Bernd Thomas
Tax legally appropriate wording for the notarial contract for the division of the purchase price of a house into movable objects, land, and building with regard to tax recognition for the maximization of depreciation allowances (BFH reference number: IX R 12/14)
and
maximum percentage value of the building in areas with high land values
Dear inquirer,
I am happy to answer your inquiry based on the information provided in the context of an initial consultation on frag-einen.com. The response is based on the factual information you have provided. Missing or incorrect information can affect the legal outcome. Please note that my advice is limited to the tax aspect of your question, a specific contract draft will be created by your lawyer or notary.
When selling a property with a building, it must be determined which acquisition costs are attributed to the building, as only this part of the costs can be tax-deductible through depreciation. An agreement in the purchase contract stating which part of the purchase price is allocated to the building must be recognized by the tax office, provided the agreement does not reveal an obvious discrepancy.
The wording should be clear and unambiguous. Ambiguity caused by colloquial wording should be avoided.
An acceptable wording could be as follows:
The purchase price is composed as described below. XX.XXX,XX € is allocated to the land. XX.XXX,XX € is allocated to the building. XX.XXX.XX € is allocated to the movable items being sold (exact listing/according to appendix, etc.).
In the past, tax offices have often accepted a flat rate ratio of 80 to 20 for the allocation of the purchase price to land and building, and in the case of multi-family houses, 85 to 15. However, with rising land prices, the land portion is likely to be significantly higher. The allocation depends on the age and condition of the building and its location.
To make an allocation or assess its appropriateness, the tax administration uses a guide and a tool which can be found on the website of the Federal Ministry of Finance:
https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Steuerarten/Einkommenssteuer/2018-03-28-Berechnung-Aufteilung-Grundstueckskaufpreis.html
The tax authorities usually raise significant doubts about the allocation if the contract values deviate by more than 10% from the values of a building expert report or from the official simplified purchase price determination.
Therefore, in principle, the building portion should not exceed 10% above the value determined with the aid of the tool.
Best regards,
Bernd Thomas
Tax Advisor
