Speculative tax Real estate

Speculative tax real estate: What you need to know about

Real estate offers great opportunities to win. They are therefore also perfect for investing or providing old-age care. It is clear that the state also wants to have its share of the possible profits. Keyword: speculative tax on real estate. You can find out exactly what the speculative tax is, how high the tax is and under what circumstances it does not arise in the first place.

What exactly is the speculative tax real estate?

Real estate is purchased for a variety of reasons. One of the most common reasons besides the use as residential property is the investment. The investor hopes for the highest possible profit or the highest possible return when the property is sold again. Under certain circumstances, the speculative tax on real estate is due on this capital gain. The legal basis for this is Section 23 of the Income Tax Act (EStG). It essentially stipulates that private capital gains on real estate are subject to income tax. In other words, they must be taxed – and that is if the profit is realised over a period of ten years. This ten-year period is often referred to as a speculative period. From this term, in turn, the term speculative tax real estate derives. Strictly speaking, however, this tax is nothing more than the personal income tax payable. Consequently, a capital gain must be reported as private income on the income tax return.

What is the speculative tax on real estate?

Unfortunately, no flat-rate information can be given about the amount of the speculative tax on real estate. It is based on two highly individual factors. First of all, there is the amount of profit made. Above all, however, there is the individual tax rate for income tax. In Germany, this can be as high as 48 percent. Even if you take the average marginal tax rate in this area on the basis, you still get a value of 40 percent. In this case, 40 percent of the profit from the sale of real estate would also have to be paid as tax.

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How can the speculative tax on real estate be avoided?

As already mentioned, the speculative tax on real estate is only due if the property is sold within the speculative period of ten years. The period always starts with the date of purchase. If the property is sold only after this period, there will be no tax on the profit made. What is important in this context is the expression ten-year period, which should be remembered. However, the profit remains tax-free if the property has been used privately by the owner within the ten-year period. However, a certain period also applies here. Before the sale, the apartment or house must have been used for private residential purposes for at least three years. It also counts calendar years that have started. A property purchased and purchased in December 2020 can therefore be sold tax-free as early as January 2022. In principle, the speculative tax on real estate is influenced by a whole range of criteria. Before a sale, you should therefore consult us and get advice from us. We will be happy to help you with your real estate sale.

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