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Value added tax on the sale of real estate within the speculation period

March 6, 2019 | 40,00 EUR | answered by Steuerberater Knut Christiansen

Dear Sir or Madam,

I already have an appointment scheduled for this Friday for the sale of an old inn, and now unexpectedly the following question has arisen, which unfortunately must be answered by this evening:

The inn was transferred into the private assets by my father 9 years ago and shortly thereafter transferred to me. The inventory was described as worthless. Since then, it has been leased out, including the worthless inventory, until 2 years ago. VAT was paid on the lease and input taxes were deducted for expenses (no renovations, refurbishments, etc. since then, only ongoing expenses). For the past two years, it has been vacant due to the lack of a tenant. Do I have to pay VAT on the sale price if I sell to a private individual? This concerns only VAT, not income tax, as the sale price is lower than the withdrawal price. I do not know if VAT was taken into account for the private withdrawal (but probably not). An expert said that no VAT is due, only input taxes on investments (not on the small input taxes for ongoing expenses, etc.) would need to be reimbursed.

Thank you and best regards.

Steuerberater Knut Christiansen

Hello and thank you for your inquiry, which I would like to answer as part of an initial consultation.

The sale of real estate is generally exempt from VAT. It could be subject to tax upon request if the buyer is subject to VAT. The input tax correction period for real estate is 10 years. This period is likely to have expired long ago due to the acquisition (or construction) by your father. Therefore, you can assume that no VAT will be incurred from the sale.

I hope this answers your question, if not, feel free to ask for further clarification at no cost.

Best regards,

Knut Christiansen
Tax advisor