VAT on real estate

VAT and real estate


Real estate is particularly interesting in the area of VAT because the legal situation offers various optimization options. Careful and professional planning can positively influence and increase the return on a property.

The following aspects are particularly interesting from a VAT perspective:


  • Avoiding "hidden taxes"
  • various transfer options when selling/acquiring a property


Avoiding "taxe occulte" is fundamentally about being able to claim the VAT incurred on property costs (e.g., tradesmen's invoices) as input tax. This can be achieved by using the property for business purposes or by opting for the rental/sale of the property. "Option" means that a consideration is voluntarily subject to VAT. The initial reaction, "I'm not going to voluntarily register for VAT and also voluntarily pay VAT on the rental or sale of my property," is often too simplistic from a business perspective: Financial advantages can be achieved through voluntary registration or voluntary taxation of various services. The option is also one of three (VAT-related) transfer options for a property. In this case, the sales price is voluntarily subject to VAT, and in return, one receives the right to claim input tax on investments/costs incurred. Alternatives for transferring a property are the so-called registration procedure or the transfer under the statutory provisions as an "exempt supply." The notification procedure can be used, for example, when a property is transferred to a closely related person. The statutory regulation generally applies when, from a VAT perspective, "nothing is done" and thus neither the transfer with option nor the notification procedure is chosen. When transferring as an "exempt supply," there is a risk that large amounts of input tax will subsequently have to be repaid to the Federal Tax Administration (FTA) or that the buyer will be denied a potential subsequent input tax deduction. For these reasons, it is often worthwhile to involve a VAT specialist in the management of a property, especially during a transfer. Worth knowing: Even for a private individual who owns one (1) property and rents it out at least partially for non-residential purposes, VAT optimization is possible, which can lead to an increase in returns.

Your contact persons

Thomas Meister

Certified Tax ExpertTrustee with Federal Certificate

41 (0)62 556 69 80