A buyer purchases an undeveloped plot of land from a municipality. She contractually undertakes to pay the development costs. If this is the case, she only has to pay real estate transfer tax on the purchase price of the undeveloped property, but not on the purchase price stated including the development costs. This has now been announced by the Federal Fiscal Court (Bundesfinanzhof, BFH) (ruling dated September 28, 2022, II R 32/20), thus continuing its case law.
In the present case, a buyer and her husband had acquired co-ownership of an undeveloped plot of land in a municipality subject to development. In the contract, the purchase price was set at 102,600 euros for the land sold and a further partial amount for all development costs. When assessing the property tax, the responsible tax office now based its assessment on the total amount.
The plaintiff initially filed an objection against this with the tax office, which, however, rejected it. She then appealed to the Tax Court, which also dismissed her claim. She appealed and demanded a reduction of the real estate transfer tax. After all, the development costs were not part of the assessment basis. The BFH ultimately ruled in her favor. According to the BFH, "the contested notices are to be amended to the effect that the development costs are not to be included in the basis of assessment."
Sources: bundesfinazhof.de (ruling dated September 28, 2022, II R 32/20)/haufe.de
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