Nesting privilege, my new favorite word! Although I’ve known about the holding model for ages, today was the first time I heard the term “Schachtelprivileg”. Simply put: only 1.54% tax on the sale of real estate! If you’re wide-eyed now, check out this short article on real estate holding. Tip! Learn more about legal forms and alternatives in Germany here: Legal forms in Germany.
Box privilege: save taxes when selling real estate
Nesting privilege: a term worth knowing!
Although I have been using the holding model in the real estate industry for years, I only recently came across the term “nesting privilege”. The bottom line? Only 1.54% tax on real estate sales! If you’re wondering, let me introduce you to the world of real estate holding in this short article.
The taxation of a real estate GmbH
A GmbH is subject to corporation tax, the solidarity surcharge and trade tax, which results in an effective tax rate of approximately 30%.
However, if you set up your GmbH in the context of real estate projects, you can benefit from the extended reduction in trade tax.
In this case, you only pay 15.83% tax on rental income and lease fees.
The same low tax rate also applies to the sale of real estate. However, care must be taken here to avoid falling into the category of commercial property trading. You may sell a maximum of three properties within five years, otherwise the tax rate rises to 30%.
The share deal offers an even more tax-efficient option for real estate sales.
Real estate holding company: Reduce the tax burden to 1.54%
By cleverly structuring your GmbH, you can reduce the tax burden on the sale of real estate to just 1.54%. A little more striking:
1.54% Taxes on sale
This concept, known as a share deal, benefits from a holding structure and the nesting privilege. Your business structure consists of two limited liability companies. One of the companies acquires the real estate, while the second limited company acts as the parent holding company. If you now want to sell your property, the holding company transfers the shares in your real estate GmbH to the buyer.
The nesting privilege comes into play here
If a corporation sells shares in another corporation, 95% of the profits remain tax-free.
This means that your effective tax rate on the profit from the sale of the property is only 1.54%.
https://lukinski.com/wp-content/uploads/2020/02/rechtsformen-firma-unternehmen-immobilien-gbr-kg-gmbh-ag-co-vergleich-vorteile-steuern-mann-buero-auswahl-strategie-immobilienfirma-steueroptimierung.jpg8011200L_kinski/wp-content/uploads/2024/04/lukinski-logo-real-estate-investment-germany-house-villa-off-market-clean.svgL_kinski2024-02-03 11:36:462024-02-03 11:36:46Real estate holding: box privilege and only 1.54% tax on sale
