Ask a tax advisor on the topic of Real estate taxation

Real estate transfer tax Property exchange/clearance Intra-family

March 21, 2012 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller

Question regarding real estate transfer tax:

A brother owns 3 properties with his sister, referred to here as A, B, and C.

Each of the siblings holds 50% ownership in each property, which were acquired through donation.

The donation was made by their mother, who properly paid the real estate transfer tax on the properties.

These joint ownership(s) are to be dissolved.

It is planned:

- the brother will receive properties A and B at 100% each
- the sister will receive property C at 100% and make a payment of €25,000 to the brother.

(Since property C is more valuable and the payment will distribute everything evenly.)

This was certified by a notarial deed.

The properties fall under the jurisdiction of different tax offices/officers.

Property A - Tax Office A. (Brandenburg- Kyritz)

Property B - Tax Office B (Berlin-Spandau)

Property C - Tax Office C (Berlin-Spandau) (also)

Now:

Tax Office A informed the brother that no real estate transfer tax is due for the full acquisition of properties A, citing § 7 para. 1 Real Estate Transfer Tax Act.

Tax Office B has not yet contacted the brother regarding the real estate transfer tax for property B, but has already sent a property tax assessment. (The brother is listed as 100% owner in this assessment)

Tax Office C has contacted the sister about the real estate transfer tax for property C and wants her to pay tax according to § 9 (1) 2 Real Estate Transfer Tax Act, listing a formula that includes the additional payment. They state that she should pay tax for the full gain of the property (50% of the value of property C).

Which tax office is correct?

Do you have to pay real estate transfer tax even if you already own 50% of the property when exchanging ownership?

Should the sister pay the tax to Tax Office C and be grateful for any inaccuracies in Tax Office A & B?

Dipl.BW/SB Ulrich Stiller

Dear advice seeker,

Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment in a preliminary consultation as follows:

The tax office C is likely to be correct here.

§ 7 paragraph 1 GrEStG cannot be applied, as a parcel-wise division of the property by the co-owners is required. I am unable to identify a parcel-wise division.

Here, § 6 GrEStG applies (transfer from a joint property). The GbR is dissolved by the transfer of the properties. According to § 6 paragraph 2, when the property is transferred from the GbR to the sole ownership of a person involved in the GbR, the real estate transfer tax is not levied in the amount of the participation share of the acquirer in the GbR. Conversely, this means that only the 50% increase in real estate transfer tax is subject to tax.

Therefore, only the 50% increase in real estate transfer tax can apply to the respective acquirer. This increase represents the consideration according to § 8 paragraph 1 in conjunction with § 7 paragraph 1 No. 2. The 25,000 euros paid by the sister increase the consideration for real estate transfer tax purposes.

I hope I could assist you.

Best regards,

Ulrich Stiller
Tax advisor/Graduate in Business Administration