J
Juicy199020 Mar 2021 12:02Hello everyone,
even if this topic doesn’t exactly fit into the area of construction financing, I’d like to ask a question here.
Broadly speaking, it does relate to costs ;-)
The question concerns gift tax when acquiring the land.
We have the opportunity to buy a 650m² (7000 sq ft) plot of land for 155€ below the latest official land value, on which we plan to build a single-family house.
There is no close family relationship between the parties.
The difference to the official land value is therefore around 100,000€. Legally, there is an exemption of 20,000€ per person (we are married and both will be listed in the land registry).
This leaves 60,000€ on which, theoretically, gift tax at rate class III of 30% would apply. That amounts to almost 18,000€, which is quite a significant sum.
I have often read in real estate contexts that the type of use plays an important role.
Often, there is no gift tax liability if the property is used by the recipient themselves. However, I cannot find clear information on this, especially regarding land plots.
I have already spoken with a local notary and a tax advisor.
The notary couldn’t give any clear statement, and the tax advisor just recited the tax classes and exemption amounts from the tax code.
But I already knew that after five minutes of online research.
Therefore, I would like to tap into the collective knowledge here in the forum.
How does the tax authority handle this? Is the tax due in full? Are there ways to reduce the amount?
Many thanks in advance for your feedback.
If you need more information, I’m happy to provide it.
Best regards!
even if this topic doesn’t exactly fit into the area of construction financing, I’d like to ask a question here.
Broadly speaking, it does relate to costs ;-)
The question concerns gift tax when acquiring the land.
We have the opportunity to buy a 650m² (7000 sq ft) plot of land for 155€ below the latest official land value, on which we plan to build a single-family house.
There is no close family relationship between the parties.
The difference to the official land value is therefore around 100,000€. Legally, there is an exemption of 20,000€ per person (we are married and both will be listed in the land registry).
This leaves 60,000€ on which, theoretically, gift tax at rate class III of 30% would apply. That amounts to almost 18,000€, which is quite a significant sum.
I have often read in real estate contexts that the type of use plays an important role.
Often, there is no gift tax liability if the property is used by the recipient themselves. However, I cannot find clear information on this, especially regarding land plots.
I have already spoken with a local notary and a tax advisor.
The notary couldn’t give any clear statement, and the tax advisor just recited the tax classes and exemption amounts from the tax code.
But I already knew that after five minutes of online research.
Therefore, I would like to tap into the collective knowledge here in the forum.
How does the tax authority handle this? Is the tax due in full? Are there ways to reduce the amount?
Many thanks in advance for your feedback.
If you need more information, I’m happy to provide it.
Best regards!
S
saralina8720 Mar 2021 14:53Juicy1990 schrieb:
How does the tax office handle this? Is the full amount taxable? Are there ways to reduce the amount?
The tax authorities refer to this as a mixed gift. For the portion involving payment, real estate transfer tax applies, and for the portion given as a gift, gift tax applies.
Any way to reduce it? No.
J
Juicy199020 Mar 2021 15:51Exactly, we are talking here about a mixed gift. But is the interpretation for land parcels equally strict if they are used by the owner? Why then is there a special rule for developed properties?
S
saralina8720 Mar 2021 16:20Juicy1990 schrieb:
Exactly, we are talking about a mixed gift here. But is the interpretation equally strict for plots of land that are owner-occupied? Why is there then a special rule for developed properties? Which special rule are you referring to?