Anyone selling a property in Germany must generally consider the speculation tax if the sale occurs within ten years of purchase. The profit from the sale is subject to taxation as a private capital gain, provided the property was not used for personal residence.
Tax Exemption for Sales Before the Ten-Year Period
However, there are important exceptions where a real estate sale can remain tax-free even before the end of this ten-year speculation period:
- Self-Use: If the owner has exclusively lived in the property in the year of sale as well as in the two preceding calendar years (considered as primary residence or secondary residence/vacation home), the speculation tax is completely waived. This regulation applies even if the property has been held for less than ten years.
- Partial Rental: Under certain circumstances, tax exemption can be achieved with predominant self-use despite partial rental.
- Inheritance: For inherited properties, the speculation period of the deceased is taken over. This means that the period can be shortened for heirs, allowing for quicker tax exemption.
These exceptions are particularly relevant for private investors and small investors, as they potentially allow for profitable property sales without having to pay taxes – even if less than ten years have passed since the purchase.
Summary
To sell a property tax-free within less than ten years:
- The property must have been used by the owner in the year of sale and the two prior years.
- Secondary residences or vacation homes also count as self-use.
- For inherited properties, the speculation period of the deceased is often shortened.
Those who meet these conditions can realize the profit from the sale without deduction of speculation tax. Otherwise, taxation on the capital gain is to be expected.