April 26, 2023 /
In a recent ruling by the Federal Fiscal Court (BFH), it was decided that the sale of a co-ownership share in a jointly owned property between divorced spouses as part of a property settlement may be subject to taxation as a private sale transaction. This applies in any case if the sale takes place within the 10-year period and there is no longer any owner-occupation due to one of the spouses moving out.
In this case, the claimant and his former wife had purchased a detached house together in 2008 and lived in it with their child. After the marriage went into crisis, the husband moved out of the property in 2015 and the marriage was subsequently divorced. In the course of the property division, the husband sold his 50% co-ownership share in the property to his former wife after she threatened to auction it off. The ex-wife then continued to live in the house with their child. The tax office subjected the profit from the sale of the co-ownership share to income tax, whereupon the plaintiff filed a lawsuit against the taxation.
The BFH confirmed the decision of the tax court and dismissed the case. In the opinion of the BFH, this case is a taxable private sale transaction, as the property was purchased and resold within ten years. This also applies to the sale of a co-ownership share as part of a property settlement following a divorce.
In principle, the sale of a property is tax-free if it was used continuously for own residential purposes between acquisition and sale or in the year of sale and in the two preceding years. However, this rule does not apply to the present case, as the divorcing spouse who sold his share of the property no longer used the property for his own residential purposes after moving out.
According to the BFH, there was no forced situation in the present case that would rule out the existence of a private sale transaction, such as in the case of expropriation or forced sale. Although the divorced wife had put her ex-partner under considerable pressure, the sale of the co-ownership share was voluntary.
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