Capital gains tax

As far as I understand, there capital gains tax applies for a 10 year period only in Germany, ie if you sell a house after 10 years in Germany, you are no longer liable for CGT.

Does anyone know (or know a good steuerberater who would know):

-- the current rate of CGT on property sales?

-- whether, if not resident in Germany when the house is sold, one is still subject to CGT in Germany (can the capital gain be reported elsewhere?)

-- whether CGT is levied in the context of overall multi-year income or is considered as a single, one-off item? For example, would it be possible to 'stretch' any large CGT payment across the years between purchase and sale when no income has been made in Germany -- so as to stay within a low tax band?

-- whether the 'no CGT after 10 years' rule is up for revision... I read that it is rumoured to be reformed at some point, but when?

Thanks!

There are accountants listed on this website that will be glad to offer proper professional advice, but I can have a quick stab here:

-- the current rate of CGT on property sales?
As I understand CGT as a concept does not really exist here, so you pay regular tax on your profits as income, although the sale of some assets (e.g. retiring from your business) gets only taxed on 50% of the profit.
http://www.germany.info/relaunch/business/...ital_gains.html

-- whether, if not resident in Germany when the house is sold, one is still subject to CGT in Germany (can the capital gain be reported elsewhere?)
As a general rule property is taxed in the country of its location. So 99% sure that even if you lived overseas (e.g. Monaco) and sold a German property that had been held less than 10 years - you would still get whacked by the Erics.

-- whether CGT is levied in the context of overall multi-year income or is considered as a single, one-off item? For example, would it be possible to 'stretch' any large CGT payment across the years between purchase and sale when no income has been made in Germany -- so as to stay within a low tax band?
CGT does not exist here. So when you sell the house and make €100,000 profit in that year - it is taxed in that year as regular income.

-- whether the 'no CGT after 10 years' rule is up for revision... I read that it is rumoured to be reformed at some point, but when?
They are looking to go for a 25% CGT tax in 2008 or 2009. But I dunno is this will be directed at properties, and I also doubt that it can be backdated. So would assume it the new tax would apply FROM the new date of 2008, and any profits AFTER that date would be taxable - i.e. any increase in the value AFTER that date would have the new tax. Otherwise would be a total impossible drama with people that have owned places for 30 years having to sell up very very quickly!!!

It may depend on whether you have lived in the house as your main home all the time you owned it. My understanding is that the 10yrs applies if you have been renting the property out.

If the value of the property has increased because you have made improvements, these may be tax deductible. Speak to a Steuerberater.

Yeah we know that. If you live in the house as your main home then of course there are no taxes to pay! I think you also get an extra 2 years (3 in the UK) from the time you moved out.

But this is CLEARLY not the discussion here.

I couldn't see anything in Hope valley's post to indicate if he has been renting his house out or not.

Well he was looking to let the house back in Feb 2006, and moved overseas last summer:

Letting German property when resident abroad

I made the assumption as no-one would ever normally simply ask if their normal home, that they are living in, would be subject to CGT on sale.

However, best get advice from Thomas that advertises here on TT 'cos he said to another TTer:


Capital gains tax on property sale after 10 years

This is similar to the UK situation (3 years in the UK), so sounds like if considering selling then best to do so within 2 years of living there, or else you are kinda forced to hang on for 10 years.

Hmmmmmmmmmmm. Quite an interesting one. If you have lived in the property for say 20 years (and made a nice profit), but then rent for 3 years and sell up - do you pay tax on the WHOLE profit, or just profit made during the rented period??? I am assuming only on the increase from when it became a rented property, but who knows with the Erics.

Overall sounds like sell within the 2 years, and avoid any taxes - not like you are gonna miss out on a booming German market.

p.s. If you do sell a rented property, after say 5 years, they ADD BACK the tax relief depreciation you have already taken on the house! Not ideal.

Thanks for this advice Johnny English --

-- the house was my main residence until last October, and has since been rented out (but now I've found a fantastic property investment in Portugal) -- so the two year rule might still give me some room interesting.
-- if not, anyone know any German remortgage specialists used to dealing with expats -- it looks like my best option is to max out on deductible interest payments?

P.S. Fingers crossed that the German housing market will pick up before 2014!

As JE said...contact Thomas who advertises on TT, he was very quick and helpful for me, it's best not to risk it with something as important as your house!