Real estate transfer tax

Real estate transfer tax can become relevant for all property transfers. This applies in particular to transfers against payment, e.g. classic real estate purchases. In this case, the tax office levies real estate transfer tax on the purchase price. The amount of land transfer tax varies from state to state, ranging from 3.5% (Bavaria) to 6.5% (Brandenburg, Saarland, Schleswig-Holstein and Thuringia).

In addition to the classic purchase of real estate, where the levying of real estate transfer tax is comprehensible to everyone, other transactions can also trigger real estate transfer tax.

Real estate transfer tax for share transfers

The transaction may be subject to real estate transfer tax, particularly if the parties involved do not directly transfer a property, but instead transfer shares in a company that in turn holds real estate (so-called real estate holding companies). Certain holding periods and participation thresholds must be observed for these share deals in order to avoid triggering unwanted real estate transfer tax. The same applies to restructuring measures within groups or shareholding structures.

Tax exemptions

However, the legislator has exempted certain property or share transfers from real estate transfer tax. For example, property transfers between spouses or in a straight line (e.g. between parents and children). Furthermore, transfers of real estate free of charge - gifts of real estate - are also exempt from real estate transfer tax. However, particular caution is required here if the property is gifted subject to usufruct. The usufruct is granted in return for payment, meaning that this part of the transfer transaction is subject to real estate transfer tax unless one of the other real estate transfer tax exemptions applies. This brief insight already shows that real estate transfer tax law contains many tax traps.

It is therefore advisable to consult a specialist tax lawyer before any real estate transaction or transfer of shares in companies holding real estate in order to identify and avoid unpleasant tax effects from the outset.