The debate over increasing real estate taxes draws attention to an issue that receives little attention. How should we deal with homes that are not to be sold in old age but are to be used financially?
While possible changes to real estate income tax (ImmoESt) are being discussed, the practical problem is coming to the fore: Many people have assets in old age, but have difficulty accessing them because they are tied up in their own house. For many, this house is not just an asset. It is a personal retreat, provision and a piece of life’s achievement. Anyone who has built, cared for, renovated and paid for things over the decades has one thing in common: security in old age.
But this security can quickly reach its limits. If care costs rise, a barrier-free conversion causes high expenses or children and grandchildren need to be supported earlier, liquidity is needed. The assets are there, but they are in the property. For many people, a complete sale is out of the question because it would usually involve moving out of their familiar home.
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Sebastian Pfisterer, Founder of Bamboo, is a lawyer and real estate law expert.
That is why models such as partial sales, life annuities or sales with lifelong right of residence are becoming more important. They are intended to enable owners to use part of their real estate assets and still remain in their own home. In the case of a partial sale, a share of the property is sold and continues to be used (a usage fee is charged for the share sold).
This is exactly where the tax imbalance begins, which becomes particularly clear when comparing two cases: Anyone who sells their own home, moves out and then moves into a rented apartment can, under certain conditions, receive tax advantages. However, anyone who withdraws capital from the house and continues to live there often does not benefit from this benefit.
From the perspective of those affected, the difference seems difficult to understand: moving into someone else’s rented apartment can be more tax-efficient than continuing to live in your own house, even though in both cases you are selling your own home that you have used for many years. The current main residence exemption from real estate income tax generally requires that the main residence be given up in the course of the sale.
This means that the existing regulation also affects those owners who did not purchase their house as an investment property, but have often lived there for decades. What is important is not so much the use of the property in the past, but rather whether the main residence will be given up after the transaction.
An expansion of the exemption could start here. It would not have to apply to investor properties or short-term speculation, but could be limited to long-term residential property. In this way, real estate taxation would not be fundamentally questioned, but would be adapted to a development that is becoming increasingly important in an aging society.
