Speculation tax - how does the tax office behave?
January 16, 2019 | 40,00 EUR | answered by Steuerberater Bernd Thomas
Dear Mr. Tax Advisor,
since March 2012 I have been the owner of a condominium in Berlin. I have had my registration there and have actually been living there. However, as I am often away on business, I occasionally rented out my apartment through AirBnB on a weekly basis (2 to 12 weeks per rental) until mid-2016 for people coming to Berlin for work. I have correctly declared and taxed all income from the rentals in my tax return. Since mid-2016, I have not rented out the apartment again and have only lived there myself.
Now I am planning to sell my condominium in the next few months. The question of capital gains tax arises.
I am aware that theoretically there is a 10-year period from the purchase of the property in which one can sell tax-free by law. However, I also know that in order to sell tax-free, it is sufficient if the condominium was used exclusively for personal use in the year of sale and the two preceding years (https://www.financescout24.de/wissen/ratgeber/spekulationssteuer). Since this is my case, I assume that I should not have to pay capital gains tax.
Nevertheless, the question arises of how the tax office will handle this situation in practice and what the entire process will look like.
Will I have to send a tax form/declaration for the tax exemption to the tax office? Could the tax office demand the tax first and then force me to reclaim/sue for the money afterwards? If so, when would the tax be due... immediately after the sale, or in 2020 with the 2019 tax return? Is it true that in some cases the tax can even be demanded directly from the buyer of the property?
I would be very grateful if a tax advisor could clarify this for me as I am quite confused about it.
Dear inquirer,
I am happy to answer your request based on the information provided in the context of an initial consultation on frag-einen.com. The response is based on the facts you have provided. Missing or incorrect information can affect the legal outcome. In particular, I assume that the apartment does not belong to or belonged to a business asset.
If you have used the apartment exclusively for your own residential purposes in the year of sale and in the two preceding years, this sale is not subject to taxation as a private sale transaction. You only indicate the sale in principle, but without specifying the selling price, etc.
The tax office will be informed of all land registry transactions and may therefore ask for further details. In the context of general cooperation obligations in the taxation process, you may be required to provide certain information upon request.
If the tax office were to assess the transaction as taxable, the tax would be determined as part of the income tax assessment. The tax would then be due in full one month after the determination date. Advance payments may be determined, especially if a large additional payment is expected.
An objection can be filed against a tax assessment notice, and a suspension of enforcement can be requested within the scope of the objection. This suspension should be granted if it is predominantly likely that your objection will be successful. If a suspension of enforcement is granted, payment will be postponed until a decision on the objection is made.
Income tax can generally not be demanded from the buyer, unless there is an exceptional case where the buyer is liable for the seller's income tax, for example in aiding tax evasion.
Best regards,
Bernd Thomas
Tax Advisor
Dipl.-Kaufmann (FH) Bernd Thomas, Tax Advisor, Neustadtswall 85, 28199 Bremen, Email bernd.thomas@yahoo.de, VAT ID No. DE316948369, Member of the Hanseatic Chamber of Tax Advisors Bremen, Registration No. 111705, Professional liability insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, Insurance sum: 250,000 euros per individual claim; annual maximum: 1,000,000 euros (for all damages in an insurance year); the professional regulations of the Tax Advisor Act apply, which can be viewed at www.gesetze-im-internet.de/stberg
