Capital Gains Tax on the sale of German Homes

39 posts in this topic

Have followed this thread and found the info useful and to-the-point. Thank you to the cogent contributors.

 

I purchased an apartment in Berlin in January of 2012. It has been the primary residence for me and my family till now, 9/2015. I took out one 5-year and another 10-year loan for the purchase. I have been entered in the Grundbuch via the Auflassungsvormerkung.

 

I am considering selling (to move in a different area of the city due to proximity to our kid's school).

 

My question: does having not paid the loans fully preclude me from having ownership rights and/or taking advantage of the no CGT in case I sell  the apartment?

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Normally the Grundbuch has the ranking on who gets the money from a sale with the bank as number 1. When you sell they get the money you still owe you get the rest (minus fees)

 

If you have the grundbuck Auffassungvormerking print out it will be one there

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If you sell up and cancel the credit you will have to pay the intrest on the the remaining years of the fixed term loan agreement.

However if you are buying another property you should be able to transfer the loan to the new property and if its more expensive take out another credit to cover the additional amount , which is what we did 4 years into a 10 year credit and arranged a new credit for additional amount which ended when the orignal credit was due to finish so that we could then join them together.

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My question: does having not paid the loans fully preclude me from having ownership rights and/or taking advantage of the no CGT in case I sell  the apartment?

Don't worry, whether the apartment is mortgaged or not doesn't matter.

It just needs to have been your primary residence no matter how little time you kept it.

Since it was, you won't have to pay capital gains tax.

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@PandaMunich, rambo, neilD very many thanks for your punctual responses! 

 

Now I only need to figure out the other half - in other words, as I am a US citizen, whether Capital Gains Tax will be deducted from the US side of things. I found the thread for the mirror question (sale of home in the US, http://www.toytowngermany.com/forum/topic/323367-capital-gains-on-us-home/), but so far not for the other way around, i.e. whether a sale of home in Germany, for a US citizen who is a resident of Germany, incurs taxes on the US side of things. Do you happen to know?  

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I'd suggest consulting the IRS publication on capital gains, but you'll probably find that you're in the clear on the US side as well since you've had the property as your private residence for at least 3 out of the previous 5 years.

 

Disclaimer: Nothing in this post should be construed as tax, accounting, legal, or financial advice. Consult qualified professionals in the relevant jurisdictions for expert advice.

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Hi there,

following this thread and the questions on whether CGT is applicable or not:

I bought an apartment and became owner in Nov 2014, with the intention of it as my primary residence. However there were tenants renting it and I had to claim eigenbedarf and so they paid me rent for 4 months until end of Feb 2015. Then I moved in and have lived there as my primary residence over 1 year.

As brings unexpected changes, and I am considering moving and selling within the next year to possibly leave germany.

Will I have to pay CGT if I am just shy of 2 years living there?

Thanks for advice!

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Yes.

The first date when you could sell without having to tax the profit would be 2. January 2017 (1. January being both a public holiday and a Sunday).

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Thanks PandaMunich, this clarifies the point, so as long as the calendar year 2017 has started then I would be exempt from CGT.

And here is a question on details, what counts as the actual "sale" that can happen earliest 2 Jan 2017 (being exempt from CGT). Would this be:

1) the earliest date to sign the contract with the new purchaser at the Notar

2) the date of the money transfer and title transfer (so some time after signing the contract)

3) or the date for the Grundbuch update? (which is after 1 & 2)

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Well, you need to have lived at least one day in 2017 in that apartment, so I would only do the sales contract on 2. January 2017 or later.

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Hello,

I am bringing life back to this old thread as I can't find this answer in other discussions.

Since last posting, I sold my apartment in late 2017, and prior to that I lived in it from March 2015 and the full year of 2016. I understand that this means I am not liable to pay capital gains tax as from discussion earlier.

I am now in the process of completing my last German tax return (As I left end of 2017). Even though I am not liable for capital gains tax on the apartment sale, do I need to declare the sale of it my tax return? (and where/how?)

Many thanks for advice!

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Can someone tell me if a German rental property is sold after 10 years, but the seller is resident in another EU country at point of sale will CGT be liable in the other EU country or has it been "treated" for tax in Germany?? Specifically talking about Ireland in this case. 

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That's something you'd have to clarify with an Irish accountant.

 

Normally, tax treaties are in place to avoid double taxation - but if the country that has the first right of taxation waives that right (Germany in this case) due to the applicable laws, that merely means that your current country of tax jurisdiction is free to tax the proceeds as defined by local law. There can't be double taxation if one country doesn't apply tax.

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Revenue are entitled to CGT at the eye-watering Irish rates I'm afraid Fr. Ted, assuming you're tax resident in Ireland. As you won't be liable to pay any CGT in Germany (thanks to the 10 year rule) you won't get any relief for CGT paid so you'll get hit at whatever rate applies to you.

 

You should note however that if the property was in fact your PPR for any time, no CGT would be due for those periods of owner occupation, on a pro-rata basis. If it was always a buy to let and never your PPR there is no relief.

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Great thread. A very specific question. Does having rented out your parking spot while using the unit as your primary residence impact the CGT exclusion (selling before 10 years)?

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Hello,

My husband and I bought an apartment 7 years ago in Munich. Can I go to Notare and change my name to that of my son name. He is not living in Germany and not German. What would be the tax implication and do I need a real estate agent or lawyer to do all paper work.

Thank you.

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You may gift your interest in German real estate to your son regardless of his residence or citizenship.

 

If the value of the interest transferred plus the value of all other gifts made by you to your son in the last 10 years does not exceed €400,000 the gift will be free of gift tax but the gift should be reported to the tax authorities nevertheless.

 

There should be no real estate transfer taxes (Grunderwerbsteuer) to pay for a gift of real estate from a parent to a child..

 

The services of a Notar are required for a real estate transaction and you would be well-advised to consult a German lawyer or a German tax advisor (Steuerberater) to help you understand the consequences of what you are doing and whether there may be an alternative more suitable to your goals.

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