Tax on house sales (capital gains)

83 posts in this topic

On 5/12/2018, 11:47:09, PandaMunich said:

The problem is that he hasn't submitted a tax return like I told him to, he has just filled in some questionnaires that are sent out automatically by the Finanzamt in the case of the sale of real estate, and which are meant to jar people into action to submit the tax return.

Which they evidently failed to do.

 

Hmmm. 

 

Following your testy response last week, I went and e-mailed the official at the Finanzamt who'd sent me the two Fragebogen, and I asked whether I needed to fill out further forms (specifically, ESt 1 C 2017 and Anlage SO 2017), or to supply additional documentation. 

 

And expecting the reply, "Natürlich müssen Sie unbedingt eine Steuererklärung abgeben", today I instead received the following: 
 

Quote

Sehr geehrter XXXX XXXX,

Ihre Unterlagen sind im Finanzamt XXXX eingegangen.  Es sind keine weiteren Formulare auszufüllen und auch keine weiteren Unterlagen einzureichen.

Bei weiteren Fragen stehe ich Ihnen gern zur Verfügung.

 

Mit freundlichen Grüßen
XXXX XXXX
Mitarbeiterin

 

God is good.  B)

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Thank you for reminding me that it's never a good idea to make an exception to a New Year's resolution:

Up till now, I was willing to make an exception for pending matters to my new strict rules.

This is no longer the case.

 

 

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Ok, I have read a number of these questions/answers but our situation is slightly different. We are both retired and our only income is from the UK for which my husband pays Tax to UK Government, neither of us receive any income from Germany. We have lived in this house for 5 years and are considering a move, within Germany. If we made any profit would we be liable for Capital Gains Tax and if so what percentage given that our tax percentage to the German Government is 0%.

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Selling a property in Germany where you have only lived yourself and that has only been used a residence doesn't attract any CGT in Germany, regardless of how long you've lived in it.

 

My interpretation of Article 6 and Article 13 of the DTA between Germany and the UK is that the UK cannot tax that sale. 
I suppose that your husband is drawing a state pension from the UK, which is why he's paying tax on it to HMRC (see Article 17, paragraph 2, of the DTA). That doesn't affect the sale of a property in Germany while you are a German resident.

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/554740/2010_Germany_UK_as_amended_2014.pdf

 

This is just my layman's interpretation. You should probably engage a "Steuerberater" to help you do your tax return for the year of the sale to make sure that you got everything right.

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On 15/12/2017, 17:44:20, PandaMunich said:

If only you ever lived in it, there is no minimum holding period for the profit to be tax-free. So you could have sold the day after you moved in and the profit would still be tax-free.

And even if you had not only ever lived in it yourself, e.g. if you had let it up till May 2016, the profit would still be tax-free if you had lived in it at least one day in 2016, the whole of 2017, and at least one day in 2018.

 

Details in:

 

 

Oh I always misunderstood this. The time you have to live in yourself (only) could then potentially be only a year and 2 days? I always thought it was the running year you start living in it plus 2 whole years...

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1 hour ago, markfusara said:

The time you have to live in yourself (only) could then potentially be only a year and 2 days?

 

Yes.

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Dear all,
I would like to ask which step of selling a house/apartment sets the day of the taxable event corresponding the sale? Is it the day when the contract is signed or of the change of ownership in the Grundbuch or when the money is received by the seller?

For example, I were to sign a sale contract during November or December of this year and the money is transferred in January, should I pay the taxes on the capital gains in 2019 or 2020?

 

Thank you very much in advance

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Unless you're a business that has to keep a balance sheet, the tax-relevant date is always the date on which you receive the money.

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1 hour ago, El Jeffo said:

Unless you're a business that has to keep a balance sheet, the tax-relevant date is always the date on which you receive the money.

 

Nope, sorry, there's an exception from that general rule for §23 EStG, which governs the sale of private assets, in this case of a house.

For §23 EStG, they go by the date on which you sign the contract (= Datum des Kaufvertrags, the contract being the Rechtsgeschäft): https://www.haufe.de/personal/haufe-personal-office-platin/frotschergeurts-estg-23-private-veraeusserungsgeschaefte-44-zeitpunkt-der-veraeusserung-und-zeitpunkt-der-anschaffung_idesk_PI42323_HI2095010.html

 

Also mentioned in here:

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Thank you very much @PandaMunich and @El Jeffo for your answers, it is an important information for me.
Sorry that I didn't find it through search in the other thread, probably because I used keywords for a sale in Germany and not abroad. I guess your answer will be valuable to other people in this thread as well.

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On 10/26/2017, 7:28:40, PandaMunich said:

 

However, if your non-German income should happen to be less than 8,820€ in 2017 (or your German profit is more than 90% of your total worldwide income), you can apply for unlimited tax liability in Germany under §1 (3) EStG, i.e. get treated just like a German resident which means the first 8,820€ (= Grundfreibetrag) of your worldwide income would then be tax-free.

 

Does this mean that one could be a fiscal resident of another European country, if they were to actually reside there most of the year, but that if their german income, from rental properties for instance, was more than 90% of their worldwide income, they could still be treated by the German Tax Authority as if they were german residents? 
 

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In the sense that you then get the tax-free amount of around 9k€, yes.

The non-German income however would not be taxed by Germany, it would just fall under Progressionsvorbehalt, i.e. it would raise your income tax rate on your German income.

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11 hours ago, PandaMunich said:

In the sense that you then get the tax-free amount of around 9k€, yes.

The non-German income however would not be taxed by Germany, it would just fall under Progressionsvorbehalt, i.e. it would raise your income tax rate on your German income.

 

Thanks Panda, that's really interesting. In the case of income mostly generated in Germany it would basically allow one to reside somewhere else and basically have the same fiscal treatment as a german resident, if there aren't other factors I'm not considering. I'm especially interested in this because I'm thinking of moving to Italy and have my main residence there, so I need to understand all that's involved in such a transition. But maybe it would be wise to start a new thread for this.

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Can I assume that for residence, only the time that you were a legal and tax resident in the dwelling counts and not the time before?

I purchased our flat (empty) in November 2017. The flat is only in my name and not in my partner's. It has never been rented out. 

My partner became a legal resident in May 2018, but I guess this doesn't count as it's only in my name (??) 

I only became a legal resident in January 2019. 

From when can I sell the flat (in case we decide to move and have to sell to be able to buy something else) without incurring CGT? 

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On 28.2.2020, 19:19:49, stevekerr said:

Does this mean that one could be a fiscal resident of another European country, if they were to actually reside there most of the year, but that if their german income, from rental properties for instance, was more than 90% of their worldwide income, they could still be treated by the German Tax Authority as if they were german residents? 

 

On 29.2.2020, 00:24:48, PandaMunich said:

In the sense that you then get the tax-free amount of around 9k€, yes.

The non-German income however would not be taxed by Germany, it would just fall under Progressionsvorbehalt, i.e. it would raise your income tax rate on your German income.

Would investment income like interest and dividends (all from publicly traded companies or funds) be taken into account when determining the 90% threshold?

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11 hours ago, PandaMunich said:

It doesn't count towards your worldwide income, please read §2 (5b) EStG: https://www.gesetze-im-internet.de/estg/__2.html

So while not residing in Germany I could have opted for being taxed as a resident even though my investment income constitutes the majority of my income and my German-sourced income is only from rental income, state (widower´s) pension and sale of electricity from a photovoltaic-facility? Would not having considered this give rise to damage compensation claims against my tax consultant?

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4 hours ago, jeba said:

So while not residing in Germany I could have opted for being taxed as a resident even though my investment income constitutes the majority of my income and my German-sourced income is only from rental income, state (widower´s) pension and sale of electricity from a photovoltaic-facility?

 

In my opinion, yes, see here: https://www.deloitte-tax-news.de/arbeitnehmerentsendung-personal/steuerrecht/fg-muenster---progressionsvorbehalt-von-auslaendischen-kapitaleinkuenften-bei-unbeschraenkter-steuerpflicht-nach-par-1-abs-3-estg.html

  • " Dies folge aus der gesetzlichen Anordnung des § 2 Abs. 5b EStG, wonach Kapitaleinkünfte mit dem für sie geltenden Steuersatz von 25 % einem besonderen Besteuerungsregime unterliegen und folglich nicht in den gesetzlich definierten Begriff „Einkünfte“ einzubeziehen sind."
  • "This follows from the statutory order in Section 2 (5b) of the German Income Tax Act (EStG), according to which investment income is subject to a special taxation regime at the tax rate of 25% applicable to it and is therefore not to be included in the legally defined term "income"."

 

They take capital income out of consideration because it is taxed with the separate, special flat rate tax of 25% (Abgeltungsteuer), which means that capital income also isn't considered progression income (= nicht unter Progressionsvorbehalt stehend) after you have opted for unlimited tax liability in Germany in accordance with §1 (3) EStG.

So the capital income won't affect your German income tax rate at all.

 

4 hours ago, jeba said:

Would not having considered this give rise to damage compensation claims against my tax consultant?

 

That is a question for a lawyer.

But please also consider this: you are probably the only one of your Steuerberater's clients who moved away from Germany.

In these cases, a Steuerberater who doesn't already do international cases may choose to terminate the mandate, simply because it's not worth his while to read up on all the international implications just for one client.

Your Steuerberater, on the other hand, kept you on, and probably continued charging you the same (low) fees as when you were still living in Germany and therefore not such a "complicated" case.

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