What taxes are incurred when selling a rented property?
March 8, 2024 | 50,00 EUR | answered by Tatiana Seiler
Dear tax consultant,
My name is Wanda Heck and I have a rented property that I would like to sell. However, I am unsure about which taxes might apply and how high they would be.
The background is as follows: I bought the property several years ago and have been renting it out since then. Now, for personal reasons, I want to part ways with the property and consider selling it.
My concerns are that I may have to pay high taxes and could potentially lose a large part of the sale proceeds. I would like to know all possible costs and taxes in advance to be well-prepared and avoid any nasty surprises.
Therefore, my question to you is: What taxes are incurred when selling a rented property? Are there ways to minimize the tax burden or avoid taxes? How can I best prepare myself to financially benefit optimally from the sale of my property?
Thank you in advance for your help and support.
Sincerely,
Wanda Heck
Dear Ms. Heck,
Thank you for your inquiry regarding the sale of your rented property and the associated tax issues. It is understandable that you would like to be well informed in advance to avoid any unpleasant surprises and to benefit from the sale in a tax-efficient manner.
When selling a rented property, various taxes typically apply. First and foremost, there is the so-called speculation tax, which is due if the property is sold within ten years of purchase. In this case, you would have to pay tax on the profit from the sale. The profit is calculated as the difference between the selling price and the acquisition costs, minus any advertising costs. The speculation tax is usually 25% plus solidarity surcharge and, if applicable, church tax.
Furthermore, when selling a rented property, income tax is also due. Here, the capital gain is subject to the personal tax rate. Again, the tax rate is usually 25%, plus solidarity surcharge and, if applicable, church tax.
There are various ways to minimize the tax burden. Firstly, you can deduct all costs associated with the sale as advertising costs, thereby reducing the profit. These costs include, for example, broker commissions, notary fees, or valuation costs. Additionally, you can also deduct renovation or modernization costs incurred in recent years, reducing your tax liability.
Another option for tax optimization could be to rent out a portion of the property and use a part of it yourself. This way, you may be able to realize the sales profit tax-free if you have lived in the property yourself for at least two years.
To best prepare for the sale, I recommend collecting all relevant documents and receipts and possibly going through them with a tax advisor. They can provide you with individual tips for tax optimization and assist you with preparing your tax return.
I hope this information has been helpful. If you have any further questions, please feel free to contact me.
Best regards,
Tatiana Seiler
Tax advisor specializing in property taxation
