Note: due to changes in the law, the information contained in this article is only partially current

Anyone who owns a property and is interested in establishing a real estate GmbH can bring it into the GmbH from his private property. However, this path leads to a taxation under the real estate transfer tax. After all, the GmbH shareholder and the GmbH are regarded as independent legal entities and thus also as independent tax entities. Therefore, when transferring a property between the two, the rules for taxation in the Real Estate Transfer Tax Act apply. Instead, however, the transfer of the property to a GbR or a partnership can take place as a first step in order to then convert the partnership into a GmbH in a second step. In this case, the real estate transfer tax is completely avoided. However, it should be noted that the conversion into a GmbH within five years after the transfer of the property to the partnership leads to retroactive taxation.

In the video we explain how you can transfer a property from your private assets to a GmbH to be founded by you without real estate transfer tax.

Transfer real estate tax-free: Introduction to real estate transfer tax

The real estate transfer tax is a tax incurred when transferring land. One condition that leads to taxation in the transfer of real estate assets is that the former owner and the new owner are two different persons (transfer of ownership according to § 1 GrEStG).

But how does this affect a situation in which a private person wants to transfer his property to his own GmbH, which he intends to found with this property? Does this also constitute a transfer of ownership in the sense of the Property Transfer Tax Act, so that property transfer tax is incurred? Although many are of the opinion that there is basically no transition to another owner, in reality this is quite different. As a corporation, the GmbH is an independent legal personality in the legal sense. This is also called a legal entity. In principle, he has the same rights and obligations as a natural person. However, this also meets the criterion of transferring ownership of land. Therefore, the transfer of a property from private assets to the assets of a GmbH leads to a real estate transfer tax.

Is the transfer of real estate still tax-free possible?

If you yourself plan to use a property from your private assets in order to transfer it to their assets when establishing, for example, a Immobilien-GmbH, and still wonder why you have to pay a real estate transfer tax in this process, then you are very welcome. In fact, we also have a solution for such situations, which allows you to transfer the property to the GmbH without real estate acquisition tax. This approach, with which you can transfer real estate tax-free, we would now like to briefly introduce you.

3.1.1. Putting the property into a GbR

If a private person wants to transfer a property from his private assets to set up a GmbH without being subject to taxation with real estate transfer tax, we recommend starting a partnership first. A first step here is to found a GbR with another person. The advantage here is that this can be implemented quite easily. In addition, the owner of the property, because he contributes 100 % of GbR’s assets, may also hold 100 % of GbR’s shares. Corresponding to this share, the real estate transfer tax is also tax-free for this transfer to the GbR (§ 5 (2) GrEStG). And of course the GbR as a partnership does not constitute its own legal personality. Therefore, the basic requirement for collecting the real estate transfer tax is also irrelevant in this context.

3.1.2. Change of shape of the GbR into an OHG or KG

The GbR can then very easily create an OHG or KG, which then takes over the property from the GbR. For this, only the registration in the commercial register is necessary. Since here too this is merely a change of form, this also remains without consequence in the real estate transfer tax.

The reason for the intermediate step via OHG or KG is that only a registered partnership can be converted into a capital company. And since the GbR is not a registered partnership, this intermediate step is inserted via an OHG or KG. Of course, you can also establish a registered partnership directly instead of a GbR.

3.1.3. Change of form of the partnership into a GmbH

The third and final step in the implementation of our tax-free transfer of the property to the GmbH is a further change of form. This time we convert the partnership into a GmbH. According to the Real Estate Transfer Tax Act, this is also possible tax-free because the change of form respects the principle of legal entity identity. Voilà, the property has made its way tax-free from private assets to the assets of the GmbH.

3.2. Preservation of the structure of participation

Due to the previously selected shareholding structures, the GmbH resulting from the conversion processes is now also 100% owned by the original property owner. This also ensures the continued unrestricted safeguarding of his economic interests in the property. In the end, the shareholder originally involved in GbR with 0% can also leave the GmbH.

4th custody: 5 years blocking period before change of form in GmbH

Now there is another aspect that we would like to point out about this process, with which real estate can be transferred tax-free. If the partnership changes legal form to the GmbH before it has held the property in its assets for at least five years, this is retroactively to be regarded as a taxable event in the case of real estate transfer tax. It is therefore necessary to include this five-year blocking period in the planning. The corresponding legislation stipulates § 5 (3) GrEStG.

Possible change of the blocking period: will soon apply 10 instead of 5 years?

At present, it can be heard that the legislature is considering a change in the blocking period. It is examined whether the blocking period of five years should be increased to ten years.