Taxes on selling a house: Here's what homeowners should know

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Can you sell your home without paying taxes?

Whether you can sell your apartment tax-free depends on various factors. In this article, we clarify the most important aspects relating to the speculation period when selling a property and answers to questions such as "when is the capital gains tax due" and other important issues relating to tax liability when selling property.

Speculation period when selling an apartment

Real estate is a lucrative and high-yield investment that often increases in value considerably over time. Many buyers take advantage of this by selling the property again after a certain period of time and profiting through the additional income. However, when selling residential property after less than 10 years, capital gains tax must be paid. This period is called the speculation period. So if you want to sell a condominium after 3 years, for example, you should take this into account in your calculation. If you intend to sell the property after more than 10 years, on the other hand, the profit is tax-free. The period begins on the day the purchase contract is signed. This also applies with regard to speculation tax on inherited real estate, for which the date of purchase on the part of the testator acts as the start date for the speculation period. When asking the question "when can a flat be sold tax-free?", various factors must also be taken into account.

Tax on sale: special regulation for owner-occupiers

In order to save taxes on apartment sales and to sell your home tax-free, you do not always have to wait for the speculation period when selling the apartment. There are exceptions here for properties that you have lived in yourself. If it is proven that the apartment has been used continuously by the person selling it in the past two years and in the current sales year, it is possible to sell the owner-occupied apartment tax-free. The so-called marginal years apply here. This means: If you moved into a property on December 31, 2019, you can already sell the owner-occupied apartment tax-free from January 2021. You can also transfer your own use to your own children. However, they then have to live in the apartment for three years and receive child benefit during this time. If this is the case, there is the option of selling the condominium after 3 years and saving the profit tax when selling the apartment . Please note the capital gains tax in the case of partial letting. If it is an apartment building in which some of the apartments are rented, speculative taxes must be paid on a pro rata basis. They are only omitted for the sale of owner-occupied apartments.

Anyone planning to sell their apartment should be aware that taxes may apply.

Amount of capital gains tax due

When selling a property, the following question in particular needs to be clarified: How much tax is due on the sale of an apartment? To calculate the capital gains tax, the profit from the sale is included. For this, the personal tax rate according to your income tax return must be taken into account. Costs incurred, for example by repairs or maintenance work and your own acquisition costs, are deductible from taxes. If, for example, you would like to sell a condominium after 5 years at a price of 300,000 euros, 10,000 euros in repair and maintenance costs will be incurred. If the acquisition costs for the property were 250,000 euros, this results in a profit of 40,000 euros. You now calculate the capital gains tax with the help of the personal tax rate. If, according to the income tax certificate, this is around 40 percent, the profit tax on the sale of the flat is 16,000 euros.

Special case: sale of several properties

If you would like to sell an apartment tax-free after 10 years, this is usually possible without any problems due to the end of the speculation period. In this context, owners with several properties often ask themselves the question "How many apartments can I sell tax-free?". However, there are some legal regulations that you should be aware of as a private person in order to avoid being classified as a commercial seller. It is possible to sell up to two apartments tax-free after 10 years. However, if a third property is sold, the first two sales profits can be taxed retrospectively. Private sellers should therefore always keep an eye on this so-called three-property limit in order to avoid having to pay taxes when selling their homes.

Frequently Asked Questions

Written by:

Stefanie Aust, Guest Writer

Stefanie loves to put complex topics from the real estate world into understandable and inspiring words. Whether it's about the right financing, choosing the right type of flat, or a successful property search: Stefanie is happy to inform you.

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