several property sales within 5 years
September 23, 2012 | 25,00 EUR | answered by Wirtschaftsprüfer André Hintz
I have several properties (some owned solely, some jointly with my wife) that I want to sell. As far as I know, I am allowed to make 3 or 6 (for married couples) property sales within 5 years in order to not become subject to commercial tax.
1. If, for example, I sell 3 condominiums (sole owner) and 2 condominiums (50% owner with my wife), does that mean I have sold 7 properties and therefore fall into the commercial tax obligation?
2. What are the tax implications of this? All properties were purchased over 10 years ago.
3. Are there any exceptions, for example in case of unemployment or retirement?
Dear questioner,
I would like to answer your question within the scope of an initial consultation and in accordance with the rules of the online portal, taking into account your fee commitment. My response is based on the facts you have presented.
Whether there is a commercial real estate trade depends on the individual case. It is important to note that spouses should be treated separately, unless there is a GbR (partnership).
In general, a commercial real estate trade exists when there is a close temporal connection (usually within 5 years) between the acquisition and sale of multiple properties. If multiple properties are sold within this period, it is presumed that a commercial real estate trade exists when more than 3 properties are involved.
Exceptions such as unemployment or retirement do not apply.
The tax consequences are that you will become a commercial enterprise in the form of a sole proprietor, and therefore earn income from business operations.
Based on the information provided, you have sold more than 3 properties within a 5-year period. You acquired these properties more than 10 years ago.
Since there is no close temporal connection between your acquisition and sale, it is likely that a commercial real estate trade cannot be assumed in this case.
There remains a residual risk that the tax office may assess the situation differently.
Therefore, it should be verified whether the properties meet the requirements to be considered objects within the scope of a commercial real estate trade. Furthermore, a clear documentation of the processes should be carried out (acquisition date, use of the properties, date of intent to sell, etc.), so that it can be shown to the tax office that there is no commercial real estate trade.
To obtain legal certainty, the situation can be presented to the tax office and a binding ruling requested. Depending on the situation, this may incur costs.
I hope that my explanations have been helpful and remain
Yours sincerely,
André Hintz
Tax advisor
Steuerberatung@andrehintz.de
