"Old properties"

This term is understood as referring to properties that were acquired prior to 31 March 2002 and were thus, in principle, not liable for tax on 31 March 2012 (i.e. the basic ten-year speculation period provided for by law prior to the 1. Stabilitätsgesetz 2012 had already expired). These properties are subject to the following calculation of the flat-rate costs of acquisition:

  • Generally speaking, the costs of acquisition are fixed at a flat rate of 86 percent of the proceeds of the sale. The taxable capital gain thus amounts to only 14 percent of the proceeds of the sale. This is subject to taxation at the special tax rate of 30 percent. In practice, this means that the tax burden amounts to 4.2 percent (14 percent x 30 percent) of the proceeds of the sale.
  • If, after 31 December 1987 – and after the most recent acquisition against payment – the classification was changed from grassland to building land, the costs of acquisition are fixed at a flat rate of only 40 percent of the proceeds of the sale rather than 86 percent. In this way, the increase in value associated with the reclassification should be recorded as a flat rate. This has often been referred to as the "reclassification tax" in public debate, which is, however, misleading in that it is not the actual reclassification itself that triggers the taxation, but rather the subsequent sale of the reclassified property. The taxable capital gain thus amounts to 60 percent of the proceeds. This is subject to taxation at the special tax rate of 30 percent. In practice, this means that the tax burden amounts to 18 percent (60 percent x 30 percent) of the proceeds of the sale.

In both cases, at the request of the taxpayer, the capital gain may also be determined – as in the case of new real estate – on the basis of the actual (and adapted if necessary) costs of acquisition of the property ("regular income calculation").

Example

Sale of a property (old property)
A holiday home was purchased for 100,000 Euro in 1990 and sold for 170,000 Euro in 2021. The capital gain thus amounts to 70,000 Euro.
As the property was acquired prior to 31 March 2002, in practice the tax burden amounts to 4.2 percent of the proceeds of the sale (170,000 Euro), i.e. 7,140 Euro: the costs of acquisition are fixed at a flat rate of 86 percent of the proceeds of the sale. The balance of 14 percent is to be recorded at the special tax rate of 30 percent.

Example

Sale of a reclassified property (old property)
A property was acquired for 5,000 Euro in 1985, reclassified from arable land to building land in 1995, and sold for 30,000 Euro in 2021.
As the property has been reclassified, in practice the tax burden amounts to 18 percent of the proceeds of the sale (30,000 Euro), i.e. 5,400 Euro: the costs of acquisition are fixed at a flat rate of 40 percent of the proceeds of the sale. The balance of 60 percent is to be recorded at the special tax rate of 30 percent.

Example

Sale of a reclassified property with a building (old property)
A property has been owned by a family for generations (the original costs of acquisition are not known). The property was reclassified to building land in 2001. A holiday villa was built on the property in 2003; it is a self-constructed building. The construction costs for the holiday villa amount to 500,000 Euro. The property, including the holiday villa, is sold for 600,000 Euro in 2021 (400,000 Euro for the holiday villa, 200,000 Euro for the land).
A distinction must be made between land and buildings when determining the capital gain. The proceeds of the sale relating to the land (200,000 Euro) are, in practice, subject to taxation at 18 percent of the proceeds of the sale, i.e. 36,000 Euro. The proceeds of the sale relating to the self-constructed building (400,000 Euro) are not subject to taxation, as the tax exemption for self-constructed buildings applies.

Advice

No further deductions should be made under this flat-rate calculation method, with the exception of the flat-rate costs of acquisition. If, within the last 15 years, the costs of building the sold property have not been deducted by depreciation for normal wear and tear, but have rather been subject to accelerated depreciation under section 28 paragraph 3 Einkommensteuergesetz (e.g. expenses under sections 3 to 5 Mietrechtsgesetz over 15 years), half of the depreciations are to be (re)added to the income at a flat rate.

In addition to the flat-rate calculation method at the special tax rate of 30 percent, it is also possible to exercise the general scheme of taxation option. From 2016, the deduction of operating expenses or professional expenditure is also permitted.

Legal basis

Translated by the European Commission
Last update: 1 January 2022

Responsible for the content: Federal Ministry of Finance