Separation - share of the house - subject to income tax
June 4, 2012 | 30,00 EUR | answered by RAin/StBin Henriette Regulla-Schiessl
Dear Sir or Madam,
I kindly ask you to clarify the following situation:
My partner and I purchased a house together in 2008 and both of us were registered in the land register. We have now (2012) separated. I have moved out. She is paying me my share of the house, and in return, I will remove my entry from the land register.
Is the amount paid out (considered as) taxable income, even though the acquisition of the property was not for commercial purposes?
To what extent am I liable for tax with this amount? (My share - my expenses for the house = profit = taxable amount?)
What can I deduct to reduce taxes? (Expenses such as interest on the loan, renovation costs, purchase costs, etc.)
Since I am self-employed and she is a civil servant, it was advantageous back then that she was the sole borrower. Nevertheless, I have always contributed to the repayment of the house loan in proportion to my share. Will this cause problems in proving to the tax office? And how can I avoid them?
Thank you in advance!
Kind regards,
The inquirer
Dear inquirer,
Thank you for your inquiry, which I am happy to answer in the context of an initial consultation, taking into account your input and the rules of this platform.
The response will be based on the facts you have provided.
Please note that any addition, omission, or inaccuracies in the information provided can affect the tax outcome.
From your description, it appears that you purchased the house in 2008 for your own residential purposes and have exclusively used it in that manner since then, without any part of it being rented out or used for commercial purposes.
You may have the provision of § 23 of the Income Tax Act in mind, which relates to the tax liability on private real estate transactions, generally being taxable within a 10-year period.
However, I can assure you that the exception of § 23 para. 1 sentence 1 no. 1 sentence 3 of the Income Tax Act applies to your situation:
"Excluded are assets that have been used exclusively for residential purposes between the time of acquisition or completion and sale (which applies to you) or have been used for residential purposes in the year of sale and the two preceding years;..."
The sale of your share of the house is not subject to tax.
I hope this information has been helpful to you.
Sincerely,
Henriette Regulla
Attorney at Law
Tax Advisor
