(2023)
Holiday apartment: Is the sale taxable even if used privately?
If you sell your holiday home or apartment, you may have to pay tax on the profit in certain cases. As a rule, the sale of a property is tax-free after 10 years. However, if the period between purchase and sale is not more than 10 years, it is considered a private sale transaction. An exception applies if the property was used exclusively for your own residential purposes during the period between purchase or completion and sale, or in the year of sale and the two preceding years (§ 23 para. 1 no. 1 sentence 3 EStG).
According to the tax authorities, the sale of a holiday apartment or weekend house within the 10-year speculation period is also tax-free if you used the property exclusively for your own residential purposes from the time of purchase or completion until the time of sale, or in the year of sale and the two previous years.
It is even harmless if the property is unoccupied outside of your own use. It is considered "for own residential purposes" even if it is only occupied occasionally, as long as it is available to you as a residence during the rest of the time (BMF letter dated 5.10.2000, BStBl. 2000 I p. 1383, para. 22).
The Cologne Tax Court ruled against the tax authorities, stating that "own use" of a holiday apartment is not applicable if it is mainly used for holiday stays. If such a holiday apartment is sold before 10 years have passed, it is considered a private sale transaction, and the profit is taxable as "other income" according to § 22 no. 2 EStG (Cologne Tax Court, 18.10.2016, 8 K 3825/11, appeal IX R 37/16).
Fortunately, the Federal Fiscal Court overturned this decision and ruled as follows: A building is also used for own residential purposes if the taxpayer only occupies it temporarily, provided it is available to them as a residence during the rest of the time. Therefore, second homes, holiday homes not intended for rental, and homes used as part of a second household can also fall under § 23 para. 1 sentence 1 no. 1 sentence 3 EStG (BFH v. 27.06.2017, IX R 37/16 BStBl 2017 II p. 1192).
The Münster Tax Court recently ruled that even if the profit from the sale of a holiday apartment is taxable, the inventory sold with it is not included. This means it is not part of the speculative profit (judgment of 3.8.2020, 5 K 2493/18 E).
