Hello 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!
J
Juicy199020 Mar 2021 21:32Uhh, that’s a clever approach. For our project, that setup isn’t suitable, but it’s still a nice idea – thanks! Tax avoidance at its best 🙂
I’m not questioning gift tax in general, but the construction project alone involves 100,000 VAT. The affordable plot is what makes everything possible in the first place, and yet you still have to deal with things like this. That really frustrates me.
I’m not questioning gift tax in general, but the construction project alone involves 100,000 VAT. The affordable plot is what makes everything possible in the first place, and yet you still have to deal with things like this. That really frustrates me.