The ten-year speculation period for profits from property sales also applies if family members use the property. This has been clarified by the Federal Fiscal Court (AZ: IX R 13/23). A married couple from North Rhine-Westphalia had tried to avoid income tax by letting their mother-in-law live in the property free of charge. The court confirmed that this use does not count as personal use and that the profit from the sale of the property is therefore taxable.
Only use by the owner himself or by his children, for whom child benefit is still being received, is deemed to be own use. This means that other forms of transfer are not exempt from tax liability. Such subtleties in the regulation are crucial for the correct application of the law and the tax treatment of real estate transactions.
Background: The profit remains exempt from income tax if the property was used by the owner in the year of sale and in the two preceding years. This regulation offers owners a certain degree of flexibility in the use of their property without losing the tax benefits if they sell before the ten-year speculation period expires.
© immonewsfeed
