The following explains whether a compulsory auction can be regarded as a private sale transaction within the meaning of § 23 Abs. 1 Nr. 1 EStG. The key point here is to distinguish between expropriation of real property and a compulsory auction.
Exclusion of a Private Sale Transaction – Expropriation of Real Property
In the case of expropriation, a private sale transaction can be ruled out because the affected party lacks any element of personal volition. As a general rule, a private sale transaction requires a voluntary transfer of the property by the taxpayer. In contrast, expropriation does not involve any voluntary act on the part of the taxpayer. As a result, no sale transaction within the meaning of § 23 EStG exists.
Private Sale Transaction – Compulsory Auction
Unlike expropriation, a compulsory auction does constitute a sale transaction. It should be noted that the affected party can prevent or stop a compulsory auction by settling their outstanding liabilities. Because the taxpayer has the option to avoid the compulsory auction, a voluntary act is attributed to them. A sale transaction therefore exists in this case.
Tax Exemption – Compulsory Auction
To determine whether a property sold by compulsory auction qualifies as tax-exempt, the ten-year period must be considered (§ 23 Abs. 1 Nr. 1 EStG). The relevant date for calculating the ten-year period is the submission of the highest bid. It is assumed that, upon submission of the highest bid, a contractual purchase agreement under § 433 BGB has been concluded. Once the purchase agreement is in place, the requirements of § 23 Abs. 1 Nr. 1 EStG are met, and a tax-exempt transfer can be examined.
Frequently asked questions
Frequently asked questions
Does a compulsory auction constitute a private disposal transaction?
Yes, a compulsory auction qualifies as a private disposal transaction within the meaning of § 23 Abs. 1 Nr. 1 EStG. The reasoning is that the owner can avert the auction by settling their outstanding liabilities. This option is regarded as a deliberate act on the part of the taxpayer.
Why is the expropriation of real estate not a private sale transaction under § 23 EStG?
In the case of expropriation, the owner lacks the personal intent to transfer the property. However, since a private sale transaction requires a voluntary transfer by the taxpayer, the requirements of § 23 EStG are not met. A taxable sale is therefore ruled out.
Which date is decisive for the 10-year period in the case of a compulsory auction?
Decisive for calculating the 10-year period under § 23 Abs. 1 Nr. 1 EStG is the submission of the highest bid. As of this date, a contractual purchase agreement within the meaning of § 433 BGB is deemed to exist. Starting from this reference date, it must be assessed whether the disposal falls within or outside the speculation period.
How does the tax treatment of expropriation differ from compulsory auction?
Expropriation occurs without any opportunity for the owner to participate and therefore does not trigger a disposal transaction under § 23 EStG. A compulsory auction, by contrast, can be averted by the debtor, which is why intentional action is presumed. As a result, only the compulsory auction is potentially taxable.
Can a forced auction be tax-free?
Yes, a forced auction can be tax-free if more than ten years have passed between the acquisition of the property and the submission of the highest bid. In this case, the speculation period under § 23 Abs. 1 Nr. 1 EStG has expired and any capital gain is not subject to income tax.