Real estate transfer tax on land only or also on the house in Hesse

Hello everyone,

we are planning to buy a plot and build a house with Town & Country in Hessen. Now, the plot is sold separately by the Town & Country headquarters; a local franchisee does the building. The question arises as to which property tax to expect? The difference between this tax applying only to the plot or to plot + construction costs is naturally several tens of thousands of euros. The background is that if there is a connection between the developer and the plot seller, potentially the tax could be applied to both, that is known. Now, the local franchisee says that while this is not impossible, it is at least unlikely for Hessen and not common practice. Clearly – the developer is also interested in selling. Can this statement be confirmed for Hessen, or are there cases where it has been disproven? Thanks

First of all: According to your text, you are referring to the real estate transfer tax, not the property tax. Could you buy the land and have it developed by another company of your choice? I would bet no, and then it is a tied deal, which means that the real estate transfer tax is also due on the house.

First of all: According to your text, you are talking about the real estate transfer tax, not the property tax.

Could you buy the land and develop it with another company of your choice? I would bet no, and then it is a tied transaction, which means that the real estate transfer tax is also due on the house.

Yes, real estate transfer tax, of course.
As I wrote, I understand the context in which the real estate transfer tax is then applied both to the land and to the house.
My question concerns the statement of my potential developer that in this "classic" case – for Massa Haus,
Allkauf Haus and others it is no different, they all have land services where they mediate land under the condition that you then also build with the company – in practice in Hesse the tax offices do not actively look for such connections and you very probably only have to pay the real estate transfer tax on the land.
Could that be correct?

That depends on what is stated in the purchase contract of the property. The tax office receives a copy of it. As soon as it states there that the construction must be carried out by a specific company, it is a tied contract.

Well, the property is sold separately by the Town & Country headquarters, the building is done by a local franchisee.

Clear answer to your question: this is a tied deal on which real estate transfer tax must mandatorily be paid on both the house AND the land. Why? Because you only get the land if you build with Town & Country. Unfortunately, this is not open for discussion.

You can only be "lucky" if the tax office doesn’t notice. But you also have to provide information about the construction – and then with the providers you mentioned, the tax office will often ask whether there is a connection between the construction and the purchase. Every tax officer knows this issue inside and out, so the alarm bells always ring there.

My concern is the statement of my potential developer that in this “classic” case - with Massa Haus, Allkauf Haus and so on it is no different, they all have land services where they mediate plots under the condition that you then also build with the company - in practice in Hesse the tax offices simply don’t actively investigate such connections and you will most likely only pay real estate transfer tax on the land.

So Town & Country is basically telling you to commit tax evasion – after all, they are already pointing out to you that a tied transaction with tax obligation exists. Definitely plan for the full real estate transfer tax.