Real estate taxation when selling a house
June 14, 2014 | 25,00 EUR | answered by Dipl.-Kfm. Frank-Olaf Illiges
I built a single-family house with a granny flat (vacation rental) in 2006/2007. The house was ready for occupancy on May 1, 2007. The apartment on the ground floor was occupied by me until 2013. Since 2013, my son has been living in this apartment. The apartment on the upper floor has always been rented out to varying vacation guests. I intend to sell this house. Turnkey price of the house on May 1, 2007: 300,000 euros, Achievable price in 2014/15: 400,000 euros. Does the possible achievable profit (in the example calculation 100,000 euros) have to be fully taxed, or only at 20 percent in case of a sale on May 1, 2015?
Dear inquirer,
Thank you for your inquiry, which I am happy to answer, taking into account your effort and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can change the tax result. Please be aware that this can't replace individual comprehensive advice.
Since less than 10 years have passed between the construction (01.05.2007) and the sale (2014) of your single-family home, the sales proceeds (100,000.00 EUR) from the sale of your single-family home are generally subject to income tax as a private sale (§ 22 No. 2 Income Tax Act (EStG) in conjunction with § 23 (1) sentence 1 EStG).
The only part of the house exempt from taxation is the part you use for your own residential purposes (§ 23 (1) sentence 3 EStG). The use for own residential purposes also applies if you have given this part of the house to your son, for whom you receive child benefit or a child allowance, free of charge (BMF letter of 05.10.2000 RZ 23). Otherwise, this part of the sales proceeds is also subject to income tax.
The part of the sales proceeds attributable to the part of the single-family home rented to holiday guests is subject to income tax due to lack of use for own residential purposes.
If not all of the sales proceeds are subject to income tax, the taxable portion will be determined based on the living area.
Kind regards,
Dipl.-Kfm. Frank-Olaf Illiges
Tax consultant
Am Wieksbach 55
33378 Rheda-Wiedenbrück
Telephone: 05242/4055666
Fax: 05242/4055677
E-mail: office@illiges-steuerberatung.de
Website: www.illiges-steuerberatung.de
