For some time now, there have been new financing offers for seniors on the real estate market. These include, above all, the partial sale of the property. In this case, the owner sells an ideal co-ownership share in the property (for example 20 % to 50 %) to a commercial provider. He receives the purchase price immediately. The sole residential use of the seller is permanently secured by a (modified) usufructuary right entered in the land register. In return, the seller pays back about 3 % of the purchase price annually as notional rent to the commercial provider.
When selling the real estate share, the acquisition of the entire real estate is taken as the basis for determining the disposal period of § 23 EStG (German law on income tax). Accordingly, the date of acquisition and the acquisition costs of the overall property are to be allocated proportionately to the co-ownership share sold. Thus, the sale of a share is not subject to tax under Section 23 EStG if the property was held in possession for ten years or used for own residential purposes within the statutory period.
As soon as the remaining co-ownership share is sold at a later date, Section 23 EStG applies again, whereby the holding period for the original overall property is to be applied. The self-use clause can also apply to the remaining co-ownership share.
Provided that the seller reacquires the sold co-ownership share after a certain period of time, he again obtains sole ownership of the property under civil law. For tax purposes, the co-ownership shares are to be considered separately from each other. If the property is sold in its entirety at a later date, the holding periods according to § 23 EStG for the co-ownership shares must be examined in isolation.
During the subsequent residential use, the partial sale has an effect above all on maintenance work. The tax reduction for craftsmen’s services according to § 35a EStG can also be claimed in full after the partial sale by the partial seller who continues to live in the property.
However, the tax reduction for energy-related renovation measures according to § 35c EStG can only be granted proportionately for the remaining co-ownership share.