Trends in property acquisition tax

A friendly hello to everyone,

I am posting here for the users the currently valid case law regarding real estate transfer tax. This listing is visible at the beginning - in the corresponding subforum - and is "recorded" there.

Current trends in real estate transfer tax

Two aspects are particularly noteworthy here:

[*]The individual federal states are allowed to determine the rate themselves through the Federalism Reform Accompanying Act.
[*]The German tax authorities may also demand real estate transfer tax on the production costs 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 the real estate transfer tax when acquiring an undeveloped plot of land, thus subjecting a transaction to additional taxes.

The ECJ ruling confirms the increasing tendency to subject the entire object to real estate transfer tax. Based on the stricter 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 include the value of the consideration according to § 9 para. 1 no. 1 Real Estate Transfer Tax Act of land plus the subsequently constructed building, meaning the turnkey project is increasingly taxed.

A separate treatment and thus tax only on the land applies _only still_ if the new owner looks for a suitable construction company themselves and there is no connection with the seller of the land.

Due to the increasingly broader assessment basis, it is hardly surprising that the authorities procure evidence themselves that documents the acquisition of the finished object. There is no transaction more transparent for tax offices than the purchase of real estate in Germany:

[*]Notaries must report the land purchase contract according to § 18 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 justify an assessment basis on the entire object. For this purpose, they request from the purchaser of undeveloped land in building zones or upon indications of a building intention early information on the planned project using the form "816/9 Inquiry about development.”
[*]Information from local newspaper announcements or construction signs is collected to determine whether a unified sale plus construction is planned.
[*]With the automatically incoming notifications, financial conclusions about the income situation of the former owner and the purchaser can be drawn. Therefore, control notifications about the messages sent by notaries to the assessment offices are generally prepared for amounts over EUR 125,000.
[*]In land transactions involving the participation of a foreign company as purchaser or seller, the submitted sale notification along with a copy of the land contract is immediately forwarded 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 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.

Rhenish greetings

It is known that the Black-Green coalition has agreed on a coalition agreement in Hessen. Less known is that this also includes the plan to increase the real estate transfer tax from 5% to 6%. The new rate is to apply from 2015.

Rhenish greetings

Latest planning in Hessen already from August 6%

19% VAT on the house, plus 6% property transfer tax. The money used to pay for all this stuff would already have been "waged" taxed. Then comes the annual property tax. Its assessment rate here is already 560%.

And luckily, these are all percentage-based charges, so they nicely rise along with the already ongoing increase in land and house construction costs. But since that doesn't seem to be enough, they are also raised very regularly to create artificial inflation, because we are supposedly currently experiencing a severe deflation.

The issue that also contributes to such situations is: If a municipality, city, or country wants/needs to be bailed out because the money is gone, they are "forced" into such measures to pump money into the system, just so they can say everything possible is being done to avert it. Then parking fees are quickly doubled, daycare costs hiked up, and whatever else they can think of...

Well, when we're all old, we'll have fat life insurance policies just waiting to be paid out. Full pension entitlements at 83 if, and because, we worked for 55 years and took such great private precautions that we won't even know what to do with all our money.

So, enough getting worked up

19% VAT on the house, plus 6% real estate transfer tax. The money used to pay for all that stuff would already be subject to "wage" taxation. Then the annual property tax. The assessment rate here is already 560%.

Real estate transfer tax must be paid on the combined deal of land + house, while at the same time the 19% VAT on the construction service is waived.

§ 4 No. 9 a UStG

The transactions subject to § 1 Abs. 1 No. 1 are tax-exempt:

9.
a)
the transactions that fall under the Real Estate Transfer Tax Act,

That is why it is outrageous what prices various complete-package providers charge for land + house, because compared to separate purchase the seller does not have to remit the 19% VAT and thus gains this amount as additional profit! However, the buyer is presented with a comparison where the final prices in the separate purchase include 19% VAT. Calculate 19% on the usual €300,000 construction costs => €47,899.16 more for the seller, since the real estate transfer tax must be paid by the buyer on top to the state and is not included!

However, the prefabricated house builder must pay the value-added tax on the purchased materials and cannot pass this tax on, but at most offset it within the framework of other sales subject to turnover tax.

Therefore, the calculation is at least somewhat flawed and the 48,000 EUR are set too high as a basis for calculation.

He only saves the value-added tax on the value added within his own company.