03. Dec 19

BFH reinforces tax relief when selling owner-occupied accommodation

The BFH delivered a ruling on Sept. 3, 2019 facilitating the sale of owner-occupied accommodation that has been rented out for a short time (Az.: IX R 10/19).

If a property is sold before the end of the ten-year speculation period, tax must be paid on any increase in value. However, the situation is different for owner-occupied accommodation: no tax is due even after a short period of occupancy if the property was personally occupied by the owner from the time it was acquired to its eventual sale, or if it was used as a private residence in the year it was sold and the two years preceding that year.

The BFH recently ruled that this tax relief also applies if the property was briefly rented out during this time. The plaintiff had purchased a condominium in 2006, which he personally occupied until moving out in April 2014. He rented out the property until he sold it in December 2014. The BFH later found that the tax office had been wrong in seeking to tax the capital gains.

It held that it is sufficient for the property to have been occupied by the owner continuously in the calendar year prior to its sale. In the year it was sold and in the second calendar year prior to this, the property need only have been even briefly occupied by the owner to benefit from the tax relief.

Lawyers experienced in tax law can offer advice.

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