The plaintiff from Franconia bought a piece of land in 2011 and wanted to sell it again a year later.
If real estate is sold within the so-called speculation period of ten years, the additional proceeds are taxable as income.
Here the plaintiff had initiated the sale, but then donated half of the property to each of their two children.
They then sold it.
The taxes on the capital gain were lower because the proceeds were distributed among the children and they also had less other income than their mother.
However, the tax office attributed the capital gain of almost 100,000 euros to the mother.
The donation to the children before the sale was abusive.
No capital gain for the mother
The BFH now contradicted this.
The plaintiff did not sell the property and therefore did not have to pay tax on the capital gain.
The profit arose with the children and also with these "to be recorded according to their tax situation".
In the case of “free acquisition”, the Income Tax Act provides for this, explained the BFH as a justification.
The corresponding provision stipulates that "the private sale transaction is then taxed by the person who carried out the sale and actually received the proceeds from the sale".
The Munich judges emphasized that this is a regulation that is intended to prevent abuse.
It should prevent private sales proceeds from not being taxed at all.
With such a "provision to prevent abuse", however, the issue is then finally regulated.
Taxpayers who orient themselves on this can no longer be accused of abuse.
The tax trick approved by the highest court of course only works if the savings in income tax are not offset by the gift tax. In the case of inheritance and gift tax, there is an allowance for children of 400,000 euros each in ten years (file number: IX R 8/20)