Speculation period for self-use and rental
May 7, 2021 | 50,00 EUR | answered by Steuerberater Knut Christiansen
We own a former farmhouse with outbuildings and a pasture, on which there are two building plots, among other things.
The purchase contract is dated 20.06.2017, in which the residential building (plus courtyard area), the outbuildings (as a group), and the pasture are individually listed and priced.
Since 23.12.2019, we have been living in the residential building ourselves, some of the outbuildings are rented out to our company (UG, since 2017) and some are used for personal use. Our sheep (hobby) graze on the pasture.
When can we sell (which part) without paying capital gains tax?
Hello and thank you for using frag-einen.com!
I would be happy to answer your question as part of an initial consultation. Please note, however, that this form of consultation cannot completely replace a personal consultation.
In general, the portion of the property that can be sold tax-free is the portion that you have used for your own residential purposes since the purchase. According to the tax authorities, this includes a usual and necessary part of the property for residential use. Therefore, the outbuildings and pastures would not be considered as part of your own residential purposes. The assessment of the farmyard would depend on its size and whether it is usual and necessary. These areas could then only be sold tax-free at the earliest 10 years after purchase (so from 21.06.2027). However, if you rent out to your own UG, it would still be necessary to check if there is a possible separation of business for these areas. In this case, these areas would be considered business assets, so the tax liability for these areas would go beyond the 10-year limit. I recommend contacting a local tax advisor who can check this for you.
You can read the administrative instruction here: https://esth.bundesfinanzministerium.de/esth/2016/C-Anhaenge/Anhang-26/inhalt.html
Feel free to reach out if you have any further questions.
Best regards,
Knut Christiansen
Tax Advisor
