Tax on the sale of a property (condominium)
September 19, 2011 | 25,00 EUR | answered by Dr. Yanqiong Bolik
My aunt (an Englishwoman living in Spain) wants to sell a property in Lower Saxony, which she bought in 2006 for 40,000 euros, for 59,000 euros now. The apartment is not used by her and is rented out. In the last 3 years, she has renovated the bathroom and fitted kitchen for around 6,500 euros. Apart from rental income (approximately 2,750 euros/year), she has no other income in Germany and also does not own any other properties in Germany.
How much tax would she have to pay on the sale? Does the renovation have a tax-reducing effect? Are there any other tax-reducing measures?
Dear questioner,
Thank you for your inquiry, which I will gladly answer taking into consideration your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, or changing information can alter the tax result.
Based on your information, I assume that your aunt is not a resident in Germany or England (meaning she has neither domicile nor habitual residence in Germany and England). With the condominium in Lower Saxony, which is part of her personal assets, your aunt earns ongoing rental and leasing income. By selling the condominium, income from private sales transactions may arise, as the period between acquisition and sale of the property does not exceed 10 years. The taxation of this income is governed by the tax treaty between Germany and Spain. Therefore, Germany has the right to tax this income. Your aunt is subject to limited tax liability in Germany.
In the year of the sale, rental and leasing income must be determined up to the time of sale.
Income from rental and leasing = rental income - advertising costs. Tax-reducing factors include advertising costs, in particular depreciation for the property (excluding land portion), depreciation for the bathroom and kitchen, ongoing operating costs not distributed to rent.
Income from sales transactions = selling price - acquisition costs + depreciation claimed for the building - advertising costs borne by the seller (e.g. advertising costs, broker fees, notary fees, land registry fees borne by your aunt).
Due to limited tax liability, your aunt is not entitled to the basic tax-free allowance. Based on the figures provided, income tax of 3600 EUR and solidarity surcharge of 190 EUR would apply. However, a definitive statement can only be made based on exact numbers. I am happy to assist you with such a calculation, taking into account the fee paid here.
I hope this information is helpful to you.
If you have any further questions, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax Advisor
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 9332 2657
Email: info@zdbz.de
