Taxation of proceeds from partition auction.
January 22, 2012 | 30,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
here is my concern:
I am a member of an undivided inheritance community that owns a multi-family house in Hannover. Now, one member has applied for forced auction, and there will be a partition auction in March 2012. If the auction goes well, I may receive a revenue of about 150,000 euros for my share of nearly 10%.
I received my share of the house in January 2007 from my mother as part of a notarial inheritance transfer.
My question now is whether and how much I have to pay taxes on this revenue. I intend to use all the money this year to finance a condominium and would therefore like to know how much I may need to withhold for the tax authorities.
Yours sincerely
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation. The response is given according to the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The taxation of the profit from the sale of the share of the property community is generally subject to income tax as a private sale according to § 23 of the Income Tax Act. An exception exists if you have used the house for your own residential purposes in the year of the sale and in the two previous years, or if the purchase occurred more than 10 years ago.
Since you acquired your share through a notarial inheritance transfer, this does not constitute an acquisition within the meaning of § 23 EStG. Only paid acquisitions are considered acquisitions under the provision. In the case of a free acquisition, the possession time of the previous owner is included in the 10-year period. Therefore, if the paid acquisition by the mother occurred more than 10 years ago, the current sale is not subject to income tax. This is only clear if no payments were made in the year 2007.
Please note, however, that in the case of equalization payments to co-heirs, a partially paid acquisition occurred in 2007. The proceeds would then be subject to taxation proportionally.
I hope that these explanations have given you a sufficient overview of the situation within the scope of your involvement and this initial consultation.
Best regards,
Michael Herrmann
Tax consultant
Diploma in Financial Management (FH)
