When can you sell an apartment building tax-free?

When can you sell an apartment building tax-free? I have summarized everything important for you here. This will help you understand quickly and easily when a tax-free sale is possible. For private individuals, only the speculation tax is usually relevant. A quick insight! Want to know more? Read here: Selling an apartment building: Taxes.

Quick answer: What to consider for tax-free sale?

A note in advance: The speculation period of 10 years is predominantly relevant for multi-family houses, as 99.9% of multi-family houses are rented out. “Owner-occupied” is possible in the context of an apartment building if you are not renting it out. Let’s say you buy a vacant or multi-family house in Berlin today, wait 3 years and then take the profits from the property price increase.

Whether it’s a rental property or real estate in general, you can sell tax-free:

  1. Speculation tax: sell tax-free
  2. 3 objects rule in Berlin
  3. Commercial property: Value added tax

Speculation tax: sell tax-free

The speculation period explained more quickly:

  • Owner-occupied = 3 years
  • Rented = 10 years

If you sell within the speculation period, you must – simply put – pay tax on the profits as normal, just like income from work, regardless of whether you are employed or self-employed. After the period has expired, the sale is tax-free. If you want to do a quick calculation, use my free speculation period calculator.

If you sell within the speculation period, you must – simply put – pay tax on the profits as normal, just like income from work, regardless of whether you are employed or self-employed. As a single person, this would typically mean a top tax rate of 42%.

Sale within the speculation period as a private individual

Let us consider the sale within the speculation period (< 10 years) as a private individual:

  • Purchase 2024 = 2,100,000 euros
  • Sale in 2033 = 4,100,000 euros
  • Taxable profit = 2,000,000 euros
  • At 42 % (single person) = 840,000 euros

Sale within the speculation period as a company

A look at the sale within the speculation period (< 10 years) as a company:

  • Purchase 2024 = 2,100,000 euros
  • Sale in 2033 = 4,100,000 euros
  • Taxable profit Berlin approx. 19.1 % (trade tax 4.1 %, corporation tax 15 %) = EUR 2,000,000
  • At 19.1 % = 382,000 euros

Sale after the speculation period

Sale after the speculation period (> 10 years / or > 3 years for owner-occupation):

  • Purchase 2024 = 2,100,000 euros
  • Sale in 2034 = 4,100,000 euros
  • Taxable profit = 2,000,000 euros
  • Tax free

But you can’t buy 10 properties now, wait 3 years and take the profits from property appreciation, because:

3 Objects Rule: Commercial trade

There is also the 3-property rule. If you sell more than 3 properties in 5 years, it is commercial real estate trading.

When selling real estate, the “3-object rule” refers to the fact that private individuals in Germany can sell up to three properties within a five-year period tax-free. If a person sells more than three properties within this period, this is considered commercial real estate trading and is subject to income tax – even if they are not rented out but are owner-occupied.

After 10 years of holding, however, the sale is always tax-free.

Commercial property: Value added tax

When selling a commercially used property that is subject to VAT and is rented out, the seller must correct the input tax deduction. If the new owner continues to let the property, no refund of input tax will be granted.

  1. Commercial properties subject to VAT require an input tax adjustment on sale
  2. The continuation of the rental does not affect the input tax refund for the seller

Sell apartment building & tax

Do you want to sell your apartment building 2025 and find out more about possible taxes? Then I recommend my two guides:

Little time, read here how you can help her: