Real Estate
Trade or business
Property description, sales documents, marketing strategy
Want to successfully sell your property? A professional property description, compelling sales documents, and an effective marketing strategy are essential. Discover how to optimally leverage these elements to highlight your property's value and find the ideal buyer. Need support with the implementation? Get in contact with us!
A professional property description, persuasive sales documents, and a well-thought-out marketing strategy are crucial to achieving the best possible price and shortening the sales period.
The personal use, compliance with the three-object rule, and correct calculation of the capital gain are important factors in minimising tax liabilities when selling real estate. A reduction in tax liability by 5% to 15% is realistic.
Utilise the allowances for inheritance and gifts, document all deductible expenses, and seek advice from property experts and tax advisors to reduce your tax burden and maximise your profit.
Do you want to achieve the best possible price when selling your property? Then a professional property description, persuasive sales documents, and a well-thought-out marketing strategy are essential. Many sellers underestimate the importance of these factors, leading to unnecessary price reductions. This article shows you how to do it better.
Overview of tax aspects when selling property
Selling property is a complex process where, in addition to marketing itself, tax aspects play a crucial role. A detailed property description and a sophisticated marketing strategy are not only important for attracting potential buyers but also for optimising the sales price and avoiding unexpected tax burdens. A professional property valuation helps you determine the realistic market value of your property, providing a solid foundation for pricing. Professional property valuation is the first step.
Objective of the article: Comprehensive information and recommendations
This article is aimed at property sellers, property heirs, and investors seeking a comprehensive overview of the tax aspects of selling property. We provide you not only with the necessary information but also specific recommendations, so you can optimise the sale of your property and avoid tax pitfalls. Whether you need to deal with capital gains tax, the three-object rule, or inheritance tax – we have the answers.
With a clear property description, professional sales documents, and a targeted marketing strategy, you lay the foundation for a successful sale. Use this guide to unlock the full potential of your property and achieve the best possible price.
What is the speculation tax?
The speculation tax is a tax on profits from private sales transactions, including the sale of real estate. The legal basis for this is § 23 of the Income Tax Act (EStG). If you sell your property within ten years of purchase, the speculation tax may be due. The amount of tax depends on your personal income tax rate. However, there are exceptions that allow you to avoid the tax.
When is the speculation tax due?
The speculation tax is due if you sell your property within ten years of the purchase date. The crucial point is the date of notarization of the purchase contract. For self-built houses, the speculation period starts with the purchase of the land. However, there are important exceptions to this rule that you should be aware of. KSK-Immobilien offers detailed information on this.
Owner-occupation in detail: The three-year rule
One of the most important exceptions to the speculation tax is the owner-occupation of the property. If you have used the property yourself in the year of sale and the two preceding calendar years, the tax is waived. This so-called three-year rule provides an attractive opportunity to bypass the speculation tax. It does not matter whether you have used the property continuously or only temporarily. Use by your family, for example children receiving child benefit, is also recognized as owner-occupation. Groundheroes.de explains owner-occupation in detail.
Owner-occupation is the key to tax-free property sales. Be sure to meet the requirements of the three-year rule to avoid the speculation tax. Professional advice can help you consider all aspects optimally.
What is the Three-Object Limit?
The Three-Object Limit is an important aspect of tax law in relation to property sales. It states that as a private seller, you must not sell more than three properties within five years without being classified as a commercial property dealer. This limit applies regardless of the type of property, including houses, apartments, garages, or shared ownership. haus.de explains the details.
Consequences of Exceeding the Three-Object Limit
If you exceed the Three-Object Limit, the tax office will classify you as a commercial property dealer. This has significant implications for your tax obligations. You will have to pay not only the speculation tax but also trade tax and potentially VAT. The trade tax is levied on the profit from property trading, while the VAT applies to the sale prices of the properties. These additional taxes can significantly reduce your returns.
Exceptions and Structuring Opportunities
However, there are exceptions and structuring opportunities to avoid the trade tax. One option is to rent out the properties for a period of more than ten years. In this case, the sale is generally considered as private asset management and is not subject to trade tax. Another option is to strategically plan your sales and not exceed the Three-Object Limit. The legal aspects of commercial property purchase are complex.
Adhering to the Three-Object Limit is crucial to avoid being classified as a commercial property dealer. Plan your sales carefully and take advantage of structuring opportunities to avoid the trade tax.
The Speculation Period for Inherited Properties
If you inherit a property, you also assume the speculation period of the decedent. This means that the time the decedent owned the property is credited to your period of ownership. If the decedent owned the property for more than ten years, the sale is tax-free for you, even if you sell the property shortly after inheriting it. If the decedent used the property themselves, the sale can also be tax-free.
Inheritance and Gift Tax
For inheritance and gifting of properties, inheritance tax and gift tax apply. The amount of tax depends on the value of the property and the degree of relationship to the decedent or donor. However, there are tax allowances that vary according to the degree of relationship. Spouses and children have higher allowances than, for instance, grandchildren or siblings. Engel & Völkers provides information on the tax aspects.
Planning Opportunities to Minimize Inheritance and Gift Tax
There are various planning opportunities to minimize inheritance and gift tax. One option is the anticipated succession, where you transfer the property to your children or grandchildren during your lifetime. This allows you to use the tax allowances multiple times, reducing the tax burden. Another option is the family home rule, which enables spouses to transfer the jointly inhabited family home tax-free. ImmobilienScout24 offers further information.
Assuming the decedent's speculation period can make the sale of inherited properties tax-free. Use allowances and planning opportunities to minimize the inheritance and gift tax.
How is the Capital Gain Calculated?
The capital gain is the difference between the selling price and the acquisition costs of the property. You can deduct certain selling costs from this difference to reduce your taxable profit. It is important to document all relevant costs to claim them in your tax return. The Federal Ministry of Finance provides information on this.
Deductible Costs in Detail
Deductible costs include, for example, the broker's commission (as advertising costs for landlords), notary fees (under certain conditions), renovation costs (for maintenance measures), and the costs for cancelling the land charge (for rented properties). It is important to note that not all costs are deductible in every case. For example, renovation costs can only be claimed if they serve to maintain the value of the property and not increase its value.
Depreciation and its Impact on the Tax Burden
If you have rented out the property, you can claim depreciation over the years. These depreciations reduce your acquisition costs and thus increase your capital gain. It is therefore important to consider depreciation when calculating your tax burden. Professional advice from a tax adviser can help you take all relevant aspects into account optimally. Market fluctuations can affect property valuation.
The correct calculation of the capital gain and the claiming of all deductible costs can significantly reduce your tax burden. Document all relevant costs carefully and seek advice from a tax adviser.
Grunderwerbsteuer
The Grunderwerbsteuer is a tax incurred when purchasing a property. Generally, the buyer bears the Grunderwerbsteuer, although it can also be contractually agreed that the seller will cover the tax. The rate of Grunderwerbsteuer varies from state to state. In North Rhine-Westphalia, for example, it amounts to 6.5% of the purchase price. It is important to take these costs into account when planning the sale of a property.
Umsatzsteuer
Private property sales are usually exempt from VAT. This means that as a private seller, you do not have to pay Umsatzsteuer on the sale price. However, an exception applies to commercial real estate trading. If you are classified as a commercial dealer, you must pay 19% VAT on your property sales. n-tv provides information on this.
Vorfälligkeitsentschädigung bei vorzeitiger Kreditablösung
If you wish to pay off your property loan early, the bank may require a Vorfälligkeitsentschädigung (early repayment penalty). This compensation is intended to offset the bank's interest loss. The amount of the Vorfälligkeitsentschädigung depends on several factors, such as the remaining term of the loan and the current interest rate level. It is advisable to inquire about the amount of the Vorfälligkeitsentschädigung before selling the property and to consider this amount when calculating the sale price. Süddeutsche Zeitung provides further information.
The Grunderwerbsteuer, Umsatzsteuer, and early repayment penalty can lead to additional costs when selling a property. Be sure to inform yourself in advance about these costs and take them into account in your planning.
Timing of the Sale
The timing of the sale can significantly impact your tax burden. If you wish to avoid the speculation tax, you should either postpone the sale until after the speculation period or use the property yourself. By using it yourself, you can avoid the speculation tax even if you sell the property within the speculation period. The Tagesspiegel provides more information.
Loss Offset
If you incur a loss on the sale of your property, you may be able to offset this loss against other gains. Loss offsetting can significantly reduce your tax liability. However, it is important to note that loss offsetting is subject to certain rules. For example, losses from private sales transactions can only be offset with gains from such transactions.
Professional Advice
The tax aspects of selling property are complex and varied. Professional advice from a tax consultant and a property expert can help you fully consider all relevant aspects and develop the best possible tax strategy. A tax consultant can help you calculate your tax liability and inform you about all planning options. A property expert can assist you in valuing your property and support you in marketing it. Our property experts are here for you.
Online Calculators and Their Limitations
Online calculators can give you an initial estimate of your tax liability. However, these calculators are often inaccurate and do not take all relevant aspects into account. Therefore, you should not rely solely on online calculators but always seek professional advice.
The right timing and professional advice are crucial to reducing your tax burden when selling property. Make use of all planning options and get support from experts.
Homeoffice and Tax
If you use part of your privately-owned property as a home office, the tax office may tax this portion under certain circumstances. However, there is the possibility to lodge an objection against this taxation. There are currently proceedings before the Federal Finance Court that aim to clarify this issue (file number IX R 11/18). It is advisable to be informed about the current legal situation and, if necessary, to lodge an objection.
Divorce and Property Sale
If you get divorced and the property is sold within the speculation period, it may have tax implications. If one partner moves out of the property before the sale, he or she may have to pay taxes on their share of the profit. Even a short-term rental of the property can restart the speculation period. Therefore, in the event of a divorce, it is advisable to inform yourself early about the tax consequences and to find a joint solution.
Ongoing Proceedings and Changes in Legislation
Tax law is constantly changing. There are always new laws and rulings that can affect the taxation of property sales. Therefore, it is important to keep up to date with current developments and adjust your own strategy if necessary. Professional advice from a tax advisor can assist you in this.
The tax treatment of home office and the impact of a divorce on property sales are complex topics. Inform yourself about the current legal situation and seek advice from experts.
The sale of a property is a complex process that includes numerous tax aspects in addition to the actual marketing. The speculation tax, the three-property rule, the inheritance tax, and the capital gains tax are just a few of the topics you need to deal with. Comprehensive tax planning is therefore essential to minimize your tax burden and maximize your profit.
The need for individual advice
Every property sale is unique and requires a tailored solution. Individual advice from a tax advisor and a property expert can help you consider all relevant aspects optimally and develop the best possible strategy. Do not rely on general advice, but instead trust the expertise of professionals.
Outlook on future developments in the property market and tax law
The property market and tax law are constantly changing. New laws and rulings frequently emerge that can affect the taxation of property sales. Therefore, it's important to keep up to date with current developments and adjust your strategy if necessary. Professional advice can assist you with this.
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KSK-Immobilien provides detailed information on taxes when selling a house.
haus.de explains the details of the three-object limit when selling property.
Engel & Völkers provides information on the tax aspects of selling a property.
ImmobilienScout24 offers further information on minimizing inheritance and gift tax.
Bundesfinanzministerium provides information on calculating capital gains.
Süddeutsche Zeitung offers additional information on extra costs when selling property.
Tagesspiegel provides further information on the timing of sales to reduce the tax burden.
What role does a professional property description play in selling?
A professional property description attracts more interested parties, presents the property in the best light, and can positively influence the sale price.
How can I avoid the speculative tax when selling a property?
The speculative tax can be avoided if you have used the property yourself in the year of sale and the two preceding calendar years (three-year rule) or if the ten-year speculation period has been exceeded.
What is the three-property limit and how does it affect my tax liability?
The three-property limit states that selling more than three properties within five years is considered a commercial trade and results in trade tax liability. Careful planning is crucial.
How does inheritance tax affect the sale of an inherited property?
For inherited properties, the speculation period of the deceased is adopted. In addition, allowances and the family home rule can minimise inheritance tax.
Which costs can I deduct from capital gains tax?
Deductible costs include, for example, the broker's commission (for landlords), notary fees (under certain conditions), renovation costs (for value maintenance), and costs for deleting the land charge (for rented properties).
What is property purchase tax and who pays it?
The property purchase tax is incurred upon buying a property and is usually paid by the buyer. The amount varies depending on the federal state (e.g., 6.5% in NRW).
How can I reduce my tax burden when selling a property?
By careful timing of the sale, utilising personal use, claiming all deductible costs, and seeking professional advice.
What role does a professional property valuation play in selling?
A professional property valuation helps determine the realistic market value, provides a solid basis for pricing, and optimises potential tax burdens.
