In Germany, there are certain ways to sell a condominium tax-free, depending on whether you used the apartment yourself, rented it out or whether commercial activities are involved. Here are the relevant aspects for each situation for your apartment sale.
If you have used a condominium yourself and want to sell it, a speculation period of 3 years applies. This means that you can sell the apartment tax-free at any time after buying it, as long as you have lived in it yourself in the meantime. This is an advantageous regulation, as you do not have to adhere to a specific holding period in order to benefit from the tax exemption.
Speculation period for capital investment (rented out)
If you have used a condominium as an investment and rented it out, the speculation period is 10 years. This means that you can only sell the apartment tax-free after this period has expired. If you sell the apartment before this period expires, speculation tax could be payable on the proceeds of the sale.
Speculation period of 10 years
Commercial trading in Germany
If the sale of condominiums becomes a commercial activity, the profits from the sale could be subject to income tax. This may be the case if, for example, you regularly buy, renovate and resell apartments with the intention of making a profit (more on the 3-object rule). In such a case, you could be classified as a commercial trader and the profits would be taxable.
Direct intention to make a profit “or” 3 properties in 5 years
Note that tax laws can be complex and individual circumstances need to be taken into account. To ensure that you take advantage of the best possible tax situation for your specific case, it is advisable to consult a tax advis or. A professional tax advisor can educate you on all the tax implications of selling a condo in Germany and help you plan optimally.
