Selling multi-family house Taxes: Speculation tax for owner-occupancy, inheritance & Co.
Selling a multi-family house Taxes – If you want to sell your multi-family house, this comes not only with the usual costs for tax, notary and land registry, but also with some tax payments. Find out here what taxes you can expect to pay when selling your apartment building. Also: How you can save taxes and what is important when selling an inherited apartment building.
Is the sale of an apartment building subject to tax?
Similar to the sale of land and a house, you may also be subject to taxes when selling an apartment building. Which taxes are due and how much depends on the value of the property as well as its use.
Under certain circumstances, you can then even save taxes. The so-called speculation tax plays an important role here. Let’s take a closer look at you.
Speculation tax on rental properties
As a rule, speculation tax is due if a property is resold within the speculation period of 10 years. The prerequisite: The property was not used as a primary residence. So if the apartment building is a rental property that you have rented out in recent years, speculation tax may well be due.
However, if you or your children have lived in the apartment building yourself, no speculation tax is due, even if the sale is within the speculation period.
The most important facts about speculation tax at a glance:
- Accrues only for properties not used by the company itself
- Tax-free sale after expired speculation period
Caution with three-object limit
If you would like to sell your multi-family house, in addition to the speculation period, you should also observe the so-called three-object limit. This means: If you sell more than 3 properties within 5 years, you can be classified as a commercial real estate dealer, which can lead to a higher tax burden.
Sale of more than 3 properties within 5 years may increase tax burden
This regulation usually concerns real estate traders and speculators who buy and sell a high number of properties within a short period of time. If the three-property limit is exceeded, the capital gains can thus be additionally taxed as income.
So if you have already sold three properties in recent years, it is advisable to sell your apartment building at a later date. This will ensure that you continue to comply with the three-property limit and your tax burden will be minimized.
Taxes on gifts and inheritance
If the multi-family house is an inherited or donated property, the question also arises here: What taxes are due? As with properties acquired by the owner, speculation tax may also be due on the sale of an inherited property.
However, one special feature should be noted: For example, the speculation period does not start on the day on which the apartment building was inherited or given away, but on the day on which it was acquired by the original owner. Thus, if the apartment building is a newly inherited rental property that was acquired more than 20 years ago, the speculation period is considered to have expired. Therefore, no speculation tax is due, even if you have only recently inherited the property.
In summary:
- Speculation tax may apply
- Only for rented or leased properties
- Start of the speculation period with the day of the original acquisition
Conclusion: Save taxes when selling a multifamily house
In summary, taxes may be payable on the sale of an apartment building. The exact amount of tax paid depends on various factors, such as the use of the property and the speculation period. The three-property limit can also play a role when it comes to selling property within a short period of time. Therefore, it is important to deal with taxes when selling real estate. If the tax consequences are not taken into account, unexpected tax payments can occur, which can reduce the profit and thus reduce the actual proceeds from the sale.
