Real Estate Transfer Tax Reloaded: Substantial Changes Envisaged Again

The draft tax bill of the Tax Amendment Act 2015/2016 provides for new rules on the taxation of gratuitous transfers of real estate, including amendments to the tax basis and the introduction of new progressive tax rates.

New regime on the taxation of gratuitous real estate transfers

Currently, gratuitous transfers of real estate within the family are subject to a beneficial tax basis equaling three times the value of a special (rather low) assessed tax value (Einheitswert) of the real estate, and a reduced tax rate of 2%. The draft tax bill provides for changes in determining the tax basis for all gratuitous transfers of real estate, and introduces progressive tax rates from 0.5% to 3.5%. Special rules apply to gratuitous transfers of real estate used in a farming or forestry business.