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If you want to sell a property privately, you normally have to pay tax on the resulting profit as income, unless the property has been in your:possession for at least ten years. However, there are exceptions to this rule. What you have to consider if you find a buyer and want to sell your house or apartment after two years, and how you can avoid taxes with a few tips, you will learn here.
The most important facts in brief
- For example, if a property (house, apartment, land) is sold within two years of its purchase, private sellers must pay income tax on the profit.
- Income tax is not levied only if the seller has used the property himself in the years before the sale.
- A profit remains tax-free up to an exemption limit of 600 euros.
- The profit from the sale of the property must be declared in the income tax return.
- If more than three properties are sold within five years of acquisition, this is generally considered to be commercial trading.
- Real estate agents or tax consultants can provide you with expert advice, especially when it comes to selling apartments, houses or land.
Directly to the desired topic
When do I have to pay income tax on the sales profit??
If a house is sold privately or with the help of a realtor, you are exempt from taxation as a private seller, provided that the sale takes place later than ten years after the acquisition (private sales transaction according to § 23 EStG). If the sale occurs before the end of the ten-year period, The sale is subject to taxation if you have not used the property yourself. These are usually rented properties, properties used for commercial or professional purposes or vacant properties or undeveloped land.
The so-called ten-year period for the:buyer:in begins with the purchase date indicated in the original notarial purchase contract and ends after the expiration of exactly ten years. If the sale of a property takes place before the end of the ten-year period, regular income taxes on the profit must be paid to the tax office.
You certify on 6. January 2020 the contract of sale. Your property is rented. Then, at the earliest, ten years thereafter, from the 7. January 2030, sell tax-free. Sell on the other hand already on 7. January 2022, the sale is taxable.
What happens if you lose the sale?
While it’s a rare occurrence in these times of skyrocketing real estate prices, it can happen: You are still within the speculation period, buy and sell with or without broker:in an owner-occupied property and thus make a loss. Since there is no profit, no speculation tax can be calculated.
However, there is a possibility, claim the loss for tax purposes. According to § 23 EStG, however, you must have made profits from real estate transactions in the same calendar year against which the loss can be offset. The profit must have been made by selling the following real estate:
- Real estate
When no taxes have to be paid on the sale of a house after two years
However, there are exceptions within the ten-year period, where income tax is not due on the sale proceeds. If a house is sold between the acquisition and the sale by the seller himself or by one of his children, the tax exemption may apply for residential purposes was used, no taxes must be paid on the proceeds, even if it is sold again after only two years.
They deed on 6. January 2020 the contract of sale of a house and move there itself a. If you then sell the house on 7. January 2022, any profit remains tax-free, since you have used the house yourself. The same applies if one of your children lived in the house, SIe does not charge rent and you are entitled to child benefit for the child.
This regulation does not only apply to the main residence. It is enough if you occupy the apartment only temporarily. Therefore, the following properties are also exempt from taxation:
- Second homes
- Vacation property or
- houses or apartments that are occupied on the basis of double household management
For undeveloped land, on the other hand, the tax exemption may be applied not can be claimed, as these cannot be used for residential purposes in the sense of the law.
If a house or apartment that or. which was rented between purchase and sale, sold two years after purchase, income taxes must be paid on the gain. The Income Tax Act provides for an exemption limit of €600. Profits that are below this limit do not have to be taxed in principle.
Early redemption fee& Speculation tax
When a loan agreement for real estate financing (house, apartment, land) is terminated prematurely, the bank forfeits interest. The interest loss is compensated by a prepayment penalty, which the:borrower:in must bear.
The speculation tax can be incurred whenever the, If you resell a property such as a house, apartment or land within ten years of purchase and make a profit on it. If the dwelling or property has been owner-occupied for more than three years, an exception can be made to this, as mentioned above.
|selling price of the property||280.000€|
|costs within the scope of the sale||-10.000€|
|Taxable profit||= 40.000€|
|Personal tax rate (speculation tax)||40%|
|Tax to be paid||= 16.000€|
Three-property limit when selling a house after two years
When selling several houses you must observe the so-called three-object limit: If you sell more than three properties within five years of purchase, with or without an agent:in, the law assumes a commercial real estate trade or. commercial property trading from.
you then pay trade tax and carry sales tax at the rate of 19 percent to the tax office from. If you have inherited a property, this property remains disregarded, unless the:the testator:in has already sold three or more properties within five years prior to inheritance.
Amount of income taxes on the private sale of real estate
The amount of taxes depends on the amount of your total income in the assessment year. In addition, the tax burden is reduced by all expenditures, which stand in connection with the sale of the house. This can be Costs for a:n estate agent:in and the:notary:in as well as Expenses for advertisements and travel expenses to viewing appointments act.
The proceeds from selling the property and the expenses are reported in the income tax return in Annex SO (Other income). According to the inflow principle, the assessment year is the year in which the:seller:in received the monetary amount for the property.
Ask your tax advisor for detailed information on this subject.
If installments are agreed over several years, the tax burden is also spread over several years. This can be advantageous, because the seller can then use the exemption limit of 600 euros that applies to each year. It may also make sense to postpone the capital gain to a calendar year in which lower other income is expected.
A:private:real estate owner:in sells his:her house or his:her apartment one year before he:she retires. In the year of the sale, he:she still has income from dependent work. However, the income in the following year will be lower due to the loss of the previous salary and the receipt of the pension. If the profit from the sale is not credited to the account of the seller until then, the total income and thus the tax burden is lower.
The most frequently asked questions about selling a house after 1 or 2 years
The speculation tax is usually 40% of the profit made by selling the property within the ten-year speculation period (starting from purchase).
☑️ When do I have to pay income tax on the sales profit?
If a property (apartment, house, land) is sold privately, you are exempt from taxation as a private:r seller:in, provided that the sale takes place later than ten years after the acquisition (private sale transaction according to § 23 EStG). If the sale takes place before the end of the ten-year period, the sale is subject to tax, provided you have not used the property yourself. These are usually rented properties, commercially or professionally used or vacant properties, or undeveloped land.
☑️ When do taxes not have to be paid on the sale of a house after two years??
There are, of course, exceptions within the ten-year period where income tax is not due on the sale proceeds. If a house was used for residential purposes between the purchase and the sale by the seller or by one of his or her children, no taxes have to be paid on the proceeds, even if a buyer is found after two years and the house is sold again.
☑️ What is the three-object limit when selling a house after two years??
When selling more than one house, you must observe the so-called three-object limit: If you sell more than three properties within five years of purchase, with or without a realtor:in, the law assumes that you are trading in real estate commercially. You then pay trade tax and sales tax at the rate of 19 percent to the tax office. If you have inherited a property, that property is disregarded unless the:testator:in has already sold three or more properties within five years before the inheritance occurred.
☑️ What is the tax on the sale of a house after two years??
Your total income in the year of assessment will affect the amount of the tax. In addition, the tax burden is reduced by all expenses that are related to the sale of the house. This can be the costs for a real estate agent and the notary as well as expenses for advertisements and travel expenses to viewing appointments.