Hello,
When is it customary to pay real estate transfer tax on land and house?
Who actually decides that?
Two aspects are particularly worth mentioning here:
[*]The individual federal states are allowed to determine the rate themselves through the Federalism Reform Accompanying Act.
[*]The German tax authorities may demand real estate transfer tax on construction costs even if the land was previously acquired independently (ECJ, judgment of 27.11.2008, C - 156/08). Because the burdening of builders with real estate transfer and value-added tax does not violate EU law. Germany is not prevented from including future construction services in the assessment basis for real estate transfer tax when acquiring a still undeveloped plot of land and thus additionally taxing a transaction with further taxes.
The ECJ ruling confirms the increasing tendency to subject the entire object to real estate transfer tax. Based on the tightened case law by the Federal Fiscal Court (e.g. judgment of 23.8.2006, II R 42/04, BFH/NV 2007 p. 760 and decision of 2.4.2009, II B 157/08, BFH/NV 2009 p. 1146), tax offices increasingly capture the value of the consideration according to § 9 para. 1 no. 1 of the Real Estate Transfer Tax Act of land plus the subsequently erected building, so there is an increasing taxation of the turnkey work.
A separate treatment and thus taxation only on the land is _only_ considered if the new owner looks for a suitable construction company themselves and there is no connection to the seller of the land.
Due to the increasingly broader assessment basis, it is hardly surprising that the administration procures evidence itself to prove the acquisition of the finished object. No transaction is more transparent for the tax offices than the acquisition of real estate in Germany:
[*]Notaries must report the land purchase contract according to § 18 of the Real Estate Transfer Tax Act.
[*]The contracting parties as taxpayers must report the contents of their non-notarized agreements within 2 weeks (§ 19 Real Estate Transfer Tax Act).
[*]The tax administration obtains indications that prove an assessment basis on the entire object. For this purpose, they request early information from purchasers of undeveloped land in building areas or in case of indications of construction intent about the planned project using form "816/9 Inquiry about Development".
[*]Information from advertisements in local newspapers or construction signs is collected to determine whether a uniform sale plus development is planned.
[*]With the automatically received notifications, financial conclusions about the income situation of former owners and purchasers can be drawn. Therefore, control notifications about messages submitted by notaries to the assessment offices are generally made for amounts above 125,000 EUR.
[*]In land transactions involving a foreign company as purchaser or seller, the submitted sale notification together with a copy of the land contract is immediately sent to the tax office responsible for the foreign company’s income taxation.
Practical note:
The Federal Fiscal Court (decision of 27.5.2009, II R 64/08) doubts the constitutionality of land transfers where the tax is not based on the consideration but, according to § 8 para. 2 no. 3 of the Real Estate Transfer Tax Act, on the tax value. Because here the Federal Constitutional Court’s requirement for inheritance tax to value all asset types at market level was not implemented.
Source: my homepage
Best regards from the Rhineland