The way real estate is taxed has a big impact on net profit. So you can buy a property either privately or through a real estate GmbH. But the amount of net profit also depends heavily on the character of the property. If, for example, it is a property that generates a high current return but at the same time also loses value, then a real estate GmbH as a buyer is to be preferred over the acquisition of privately. However, if the case is the other way round, then one should give preference to the purchase from private than the purchase by means of a real estate GmbH. At the same initial cost, the profits can diverge considerably in some cases. This depends in particular on whether a sale of private can take place tax-free after the expiry of the ten-year speculative period.

Real estate is a good investment. While their acquisition is costly because prices on the real estate market are currently quite high, it also brings advantages. As a rule, the current returns are also considerable. And the generally further rising real estate prices also make real estate appear attractive as a speculative object.

In this article, we want to determine the tax influence of the return and speculative value of a property on the choice of the purchase form, based on a comparative analysis based on calculation examples.

Before we start the comparative calculations, we want to determine the methodology of our approach more precisely. First of all, it seems important that we focus on two comparative models. For this purpose, we use the conditions of a property management GmbH and a private person. More specifically, we investigate when and how the acquisition of a property by means of a real estate GmbH or privately beneficial effects. Your tax peculiarities thus shape the framework conditions under which we try to achieve the optimal investment strategy. However, it must be noted that in both cases the net profits are ultimately decisive.

Another prerequisite for ensuring direct, objective comparability of all options presented is that we always assume the same acquisition costs. These should be fixed EUR 10,000,000. This value is divided into a share of 20%, which is accounted for by land, and the rest, which includes the building. For simplification, we assume that all associated and also incurred purchase costs (for example, notary costs, real estate acquisition tax) do not make a difference here. In addition, we do not make assumptions that ultimately have no influence on the meaningfulness of our results. For example, we regard debt financing, as realistic as it may be in everyday life, as a negligible aspect.

The private person is, by the way, to be single and non-denominational. For reasons of simplification, we dispense with an optional consideration of the parts income procedure.

Variable factors should be the returns and the development of real estate prices alone. We want to distinguish between a return object and a speculative object. For the yield object, the current yield should be 8% per year. At the same time, this is accompanied by an impairment of 20% over a period of ten years, which is decisive for our considerations. The speculative object, on the other hand, should only generate an annual return of 4%. In the same ten-year period, however, the value of the property grows by 20%.

Now we come to the concrete calculations. In the first case, we consider the net profits that the purchase of a return object from private or through a real estate GmbH brings about.

When buying a return property from private, an owner earns a taxable profit of EUR 800,000 annually at a return of 8%. However, for tax purposes, you have to make a depreciation of 2 % annually on the building; However, there is no depreciation for land. Thus, the depreciation reduces the annual profit by EUR 160,000. The tax office thus only taxes a profit of EUR 640,000.

According to the information obtained from the online tax calculation program of the Federal Ministry of Finance for this profit, an income tax plus solidarity surcharge of EUR 285.509.37 is incurred for 2021 on a profit of EUR 640,000. Knowing that this is subject to annual changes, however, we want to generalize for our purposes that this will remain so for the next nine years. In total, this then leads to levies of EUR 2,855,093.70. Of the cumulative profit of EUR 8.000.000 achieved in the same period, a profit of EUR 5.144.906.30 thus remains.

The next step now lies in the private sale of the property. After the expiry of the speculative period, the sale of the return object from private takes place tax-free anyway. With an admittedly quite high loss in value of 20% compared to the original acquisition costs, the property now brings in only EUR 8,000,000. Either way, no taxable profit is incurred by selling the property from private. However, we still have to consider the loss of EUR 2.000.000 in the overall analysis below.

So let’s summarize the loss from the sale of the property with the annual profits after tax. This results in a net total profit of EUR 3,144,406.30, which is decisive for our considerations.

If, on the other hand, you buy such a return object instead of privately by means of an asset management real estate GmbH, the taxation is different. Because such a real estate GmbH can set the extended real estate reduction in the trade tax, subject to all conditions. This in fact leads to an exemption from business tax. Thus, at the level of Immobilien-GmbH, only corporate tax remains. But first we also deduct the annual depreciation on the building in the amount of EUR 160,000 from the profit. With a flat-rate tax rate of 15%, the corporate tax is therefore EUR 96,000 per year. Within ten years, the cumulative total profit of EUR 8,000,000 remains exactly EUR 7,040,000.

However, this is only the profit earned by Immobilien-GmbH. However, in order to arrive at the net total profit, which we use as a comparison basis, we also have to make a final profit distribution. The flat-rate capital gains tax of 25 % and the solidarity surcharge of 5,5 % amount to EUR 1,856,800. This results in a profit at the shareholder level of EUR 6,143,200 based solely on the return.

But also here we have to pay additional attention to the sale of the properties. In the case of a real estate GmbH, we must in principle also consider the possible taxation. However, since the sale by Immobilien-GmbH in this case does not generate a profit but a loss of EUR 2.000.000, the proceeds remain tax-free. Thus, we calculate a final net total profit of EUR 4.143.200.

With a return of 4% annually, a private real estate investor receives a taxable profit of EUR 400,000. From this one deducts the annual depreciation of EUR 160,000 and subjects the resulting EUR 240,000 to the income tax and the solidarity surcharge. According to the online calculator, a total levy of EUR 96.704.46 is incurred. This leaves EUR 303.295.54 as profit after tax.

Over a period of ten years, a purely return-oriented total profit after tax of EUR 3,032,955.40 is achieved.

But now the sale of the property also comes into play here. Thus, the sale of the property from private here also remains without tax consequences, although it brings in a profit of EUR 2.000.000. This is because the sale of private remains tax-free after the expiration of the ten-year speculative period.

So we expect a net total profit of EUR 5,032,955.40.

In addition, the leverage effect must be considered in the private purchase of real estate.

When buying such a speculative object by a Immobilien-GmbH, we can also expect an annual return of EUR 400,000. We also deduct EUR 160,000 from this as an annual depreciation. In the case of taxation, the business tax is also eliminated here due to the extended reduction of land. Thus, EUR 240,000 is subject to the flat-rate corporate tax with a tax rate of 15%. Thus, the corporate tax is EUR 36,000. The profit after taxes thus amounts to EUR 364,000.

Over ten years, the profit after tax resulting from the return thus grows to EUR 3,640,000. For this purpose, we assume that Immobilien-GmbH will retain it and pay it out at the end of the ten scheduled years. But first we wait to see what the profitable sales revenue may bring us.

Since the sale of the property results in a positive difference of EUR 2.000.000 compared to the purchase, we can see a decent profit. But the Immobilien-GmbH, unlike after the sale of private, has to tax him quite regularly. Again, only 15 % of this company is corporate tax as long as it does not include any commercial activity. Assuming that the extended land shortage takes effect and thus saves us the trade tax, we come to a corporate tax of EUR 300,000. Accordingly, the Immobilien-GmbH from the sale of the speculative object still remains EUR 1,700,000 as profit after tax.

Finally, we calculate what amount the Immobilien-GmbH pays out as net total profit after deduction of the capital gains tax (including solidarity surcharge) to be recognised as withholding tax. For this purpose, we form the sum of the return-oriented profit and the profit from the sale and thus arrive at a taxable amount of EUR 5.340.000. Thus, taxes amounting to EUR 1,408,425 will flow to the Treasury, while the shareholders will retain a net total profit of EUR 3,931,575.

Let us now come to the evaluation of the calculated data. As one can easily determine, the recommendation for a real estate GmbH or for the purchase of a property from private depends mainly on the two factors return and increase in value. In the case of a return object, the purchase of a property from a certain value by means of a real estate GmbH is worthwhile. This is especially true if the property should rather lose value over time. However, if it is foreseeable that their value will increase beyond their acquisition costs, then the purchase of the property from private must be considered as an option in order to find the most optimal way for taxation. This is due to the tax exemption of the sales proceeds after the expiration of the ten-year speculative period, which can only be used for a private purchase.

So the bottom line is that the larger the share of profit that flows from the sale of a property, the more tax-wise it is worth buying privately. Conversely, Immobilien-GmbH is cheaper when acquiring a property compared to a privately taxed property, the greater the share of the current return on the total profit, including the consideration of the future capital gain, is in the end.