Speculation tax
July 28, 2009 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello, I have the following question:
My parents bought a farm for me in 06.2006, which I have been living in for free since 15.07.2006. They themselves never lived here. On 07.04.2009, the farm was transferred to me through a gift contract at the notary. Now I would like to sell the farm again for personal reasons in order to acquire another property.
1. Is it correct that capital gains tax is incurred when selling with a profit? I have not been the owner for 2 years yet, but my parents have, does this not matter since I have been living here for 3 years and it was a gift?
2. What would be the percentage of capital gains tax if it applies? I am a retiree due to full disability for an indefinite period. If I have researched and understood correctly, the profit is added to the income and taxed at the applicable tax rate for me. But how high is this tax rate for me as a retiree?
Best regards
Dear client,
Thank you for your inquiry, which I would like to answer based on the information provided and considering your situation within the scope of an initial consultation as follows:
In responding to your question, I assume that the farmhouse is part of your personal assets and therefore not considered as business assets or agricultural and forestry assets. There are 2 alternatives for exemption from the so-called speculation tax:
1st Alternative
The property is used exclusively for your own residential purposes between purchase and sale. Result: The sale is tax-free.
2nd Alternative
The property is used for your own residential purposes in the year of sale and the two preceding years. Result: The sale is tax-free.
It is certain that the 10-year period has not yet elapsed. For the calculation of the 10-year period, the purchase by your parents in 2006 is considered, so that the speculation period ends in 2016 if the above alternatives do not apply.
The 1st alternative does not apply, as your parents did not use the property for their own residential purposes.
The 2nd alternative would apply to you as follows:
You could sell the property tax-free from January 2, 2011, as you used the property for your own residential purposes in the year of sale (2011) and the two preceding years (2010 and 2009). The first and last year of use for your own residential purposes do not have to be a full year.
If you sell before January 2, 2011, you must calculate the profit from the sale as follows:
Sale price minus the parents' acquisition costs minus the advertising costs related to the sale. This difference is then the taxable profit from the sale. Depreciation amounts of the property are not considered in the calculation of the profit from the sale, as the apartment was initially transferred to you free of charge and is considered to be transferred to you free of charge after the transfer, so there is no rental income.
Unfortunately, I cannot provide you with the tax rate as I do not know the amount of taxable income, which depends on the amount of earnings.
It is possible that agricultural and forestry issues may still play a role. Therefore, you should definitely seek binding tax advice BEFORE the sale to avoid any mistakes.
Kind regards,
Ulrich Stiller
Tax consultant
