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neubau oder altbau advantages and disadvantages
The decision between a new build and an existing property is one of the most significant when buying real estate. Both options have their charm and challenges. Find out which aspects you must absolutely consider to avoid making the wrong decision. Do you need personalised advice? Get in contact with our experts.
The decision between new builds and older properties heavily depends on your individual goals and risk tolerance. Consider both the advantages and disadvantages of both options.
The speculation tax can significantly impact your returns. However, through personal use or strategic planning of the timing of the sale, you can avoid or reduce it.
A professional consultation with a tax advisor is essential to optimise the tax implications of your property sale. This can significantly improve your financial situation and avoid unnecessary tax payments.
The Eternal Question: New Build or Existing Property?
The decision between a new build and an existing property is one of the most fundamental for property buyers and investors. Both options have specific advantages and disadvantages that need to be carefully considered. This article aims to help you make the right choice by highlighting the essential aspects of both options. A well-informed decision is crucial to be satisfied with your home or investment in the long term.
Overview of the Tax Aspects of Property Sales
An important aspect of buying and selling property is the speculation tax. This tax may apply if you sell a property within ten years of acquiring it. It's important to be aware of the tax implications of a sale within this period, as it can significantly affect your return. While the topic of speculation tax is distinct from the direct comparison of new build and existing properties, it is relevant for every property owner.
What is the speculative tax?
The speculative tax is a tax on the profit made from selling a property within a certain time frame. The legal basis for this is § 23 EStG. This tax is particularly relevant if you plan to sell a property within ten years of purchase. It's important to understand when and how this tax arises to adjust your financial planning accordingly.
When is speculative tax due?
Basically: If you sell a property within the ten-year speculation period, the profit is taxable. The ten-year period begins on the date of the notarised purchase agreement. However, there are exceptions to this rule that allow you to avoid the tax.
Exceptions to the speculative tax
There are several exceptions allowing you to bypass the speculative tax. One of the most important exceptions is personal use. If you have lived in the property yourself or your children have lived there, the sale may be tax-free. Additionally, use as a second home can lead to tax exemption under certain conditions. In the case of an inheritance or gift, the previous owner’s holding period is counted, which can shorten the speculation period. However, you should always discuss the exact conditions with a tax advisor.
Definition of Owner-Occupation
Owner-occupation means that you use the property as your main residence and it is the centre of your day-to-day life. This clearly differentiates it from letting, where the property is not occupied by you. The proof of owner-occupation is crucial to ensure tax exemption upon sale. It is important that you can document this, for example through registration certificates or other official documents.
Time Requirements for Owner-Occupation
To benefit from tax exemption, you must meet certain time requirements. Generally, you must have used the property yourself in the year of sale and the two preceding calendar years. The so-called 'border year' concept offers a certain degree of flexibility since full calendar years are not necessarily required. It's more about the time between purchase and sale. However, you should always check the precise regulations individually.
Owner-Occupation by Children
Owner-occupation by your children can also be recognised under certain conditions. An important requirement is the receipt of child benefit. If you allow your children to use the property free of charge and receive child benefit, this is generally considered as owner-occupation. This is particularly relevant for parents who wish to provide a flat or house for their children and sell it later. The tax advantages here are significant.
The 3-Property Rule
The so-called 3-property rule is an important aspect to consider when selling real estate. If you sell more than three properties within five years, this may be classified as commercial property trading. This has significant tax implications that you should certainly avoid. It is advisable to seek tax advice before selling multiple properties.
Tax implications of commercial property trading
If you are classified as a commercial property trader, not only will you be subject to capital gains tax, but also business tax and value-added tax. This can significantly reduce your returns. Therefore, it is essential to consult a tax advisor to carefully analyse and optimise the tax consequences. Professional advice can help you avoid unnecessary tax payments.
Distinction from private asset management
The distinction between commercial property trading and private asset management is often challenging. Criteria for differentiation include the intention to generate profit and the extent of activities. If you primarily manage your wealth and do not actively engage in the market, you are generally classified as a private asset manager. However, the exact distinction should always be assessed individually.
What is early repayment compensation?
The early repayment compensation is a penalty you must pay to the bank if you terminate a loan early. This often happens when selling a property that still has an outstanding loan. The bank demands this compensation to cover lost interest. It is important to consider these costs when planning your property sale.
How is the early repayment compensation calculated?
The calculation of early repayment compensation is complex and depends on various factors. The most important influences include the remaining term of the loan, the difference in interest rates, and any processing fees. The bank will carry out an individual calculation to determine the exact amount of compensation. It is advisable to examine this calculation carefully and, if necessary, seek a second opinion.
Strategies to avoid or reduce early repayment compensation
There are various strategies to avoid or reduce early repayment compensation. One option is to wait out the fixed interest rate period. You could rent out the property and wait until the fixed interest rate period expires. Another option is a property swap, where you offer the bank a new security. The so-called withdrawal joker can also be a means to circumvent early repayment compensation by checking the loan contract for errors. However, you should always discuss your individual options with an expert.
Costs that Reduce the Taxable Profit
There are various costs you can claim when selling a property to reduce the taxable profit. These include brokerage fees, notary fees, advertising costs, and travel expenses. These expenses can significantly reduce your taxable profit. It is important to keep all relevant receipts to substantiate these costs.
Offsetting Losses
Under certain circumstances, you can offset losses from property sales against profits from other property sales. However, this is not always possible. It is important to note that you cannot offset losses from property sales against profits from other types of income. The specific regulations regarding offsetting losses should be discussed with a tax advisor.
Strategic Planning of the Sale Timing
Strategically planning the timing of the sale can help you take advantage of tax benefits. For example, you can defer the profit to a year with lower income to reduce your tax rate. Considering the tax allowance can also help you save on taxes. Careful planning is crucial to minimize your tax burden.
New Builds and Speculation Period
For new builds, the speculation period generally starts with the purchase of the land. It is important to note that constructing the house does not trigger a new period. This means the speculation period is already ongoing while you are building the house. Plan accordingly when selling to avoid unwanted tax payments. The exact calculation is crucial in this matter.
Old Buildings and Speculation Period
For old buildings, the speculation period can be affected by inheritance or gifting. In such cases, the previous owner's ownership period is credited. This can significantly shorten the speculation period. Thoroughly inform yourself about ownership conditions to accurately determine the speculation period. The crediting of the prior ownership period is an important advantage.
Renovation Costs and Value Increase
Renovation costs can reduce the taxable gain, as they can be claimed as expenses. The value increase of the property also plays a role in calculating the speculation tax. It is important to keep all relevant receipts to prove renovation costs. A detailed breakdown of the costs is essential.
Summary of Key Points
The speculation tax is a complex topic that must be considered when planning a property sale. Owner-occupation, commercial property trading, early repayment penalties, and tax optimisation are important aspects you should be aware of. Early planning and consultation are crucial for securing your financial success.
Recommendations for Property Sellers
It is advisable to consult a tax advisor early on to analyse your individual situation and optimise the tax implications of your property sale. Consider all relevant factors and plan your sale carefully. Professional advice can help you avoid unnecessary tax payments.
Outlook on Future Developments
Legislation regarding the speculation tax may change. Therefore, it is important to keep up to date with current developments. Possible adjustments to the speculation tax may impact your planning. Stay informed to adjust your strategy accordingly.
Are you considering selling a property? The tax aspects can be complex, but with the right planning and support, you can optimise your financial situation. We at Auctoa offer comprehensive advice and support in assessing your property and planning your sale. Contact us today to start your individual consultation and make your property sale a success. Register here for a free initial consultation!
The decision between new construction or existing property is complex, but with the right support, you will find the perfect property for your needs. Whether you prefer the modern efficiency of a new build or the classic charm of an older property, the choice should be well-considered.
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Are you ready to take the next step? Contact us today to learn more about our services and how we can help you make the right property decision. Visit our real estate page for more information or get directly in contact with us. We look forward to supporting you on your journey!
Umweltbundesamt provides information on energy-saving in the building sector, which is particularly relevant when deciding between new construction and old buildings.
Statista offers data on the structure of residential construction in Germany, broken down into new builds and renovations.
Bayerischer Rundfunk reports on the trend in the construction industry, shifting from new buildings towards renovations.
What is capital gains tax and when is it incurred on property sales?
Capital gains tax is a tax on profits from selling a property within ten years of purchase. It applies when the property wasn't used personally. § 23 EStG provides the legal basis.
How can I avoid capital gains tax on property sales?
The capital gains tax can be avoided if the property is used personally in the year of sale and the two preceding calendar years. Use by children, for whom child benefits are received, can also count as personal use.
What is the 3-Property Rule and what are its tax implications?
The 3-Property Rule states that selling more than three properties within five years may be classified as commercial property trading. This results in the payment of trade tax and VAT in addition to capital gains tax.
What is early repayment penalty and how can I avoid it?
An early repayment penalty is a fee charged by banks when a loan is terminated early. It can be avoided by waiting out the interest rate lock-in, suggesting a property exchange, or using the revocation option.
What costs can I claim for tax relief when selling a property?
When selling a property, estate agent fees, notary costs, advertising expenses, and travel costs can be claimed for tax relief to reduce the taxable profit.
How does the choice between new build and older property affect the speculation period?
For a new build, the speculation period typically starts with the purchase of the land. For an older property, the speculation period can be influenced by inheritance or gift, with prior ownership periods being credited.
What does personal use mean and how can I secure tax exemption when selling property?
Personal use means you occupy the property as your main residence. Proof of personal use is crucial to secure tax exemption upon sale. This can be done through registration certificates or other official documents.
What should be considered regarding the renovation of older properties with respect to capital gains tax?
Renovation costs can reduce the taxable profit since they can be claimed as expenses. It's important to retain all relevant receipts to verify renovation costs.
