Sound legal and tax advice is essential for the purchase, sale, development and redevelopment of real estate projects. Taxes can have complex consequences and it is therefore important to sit down with your advisor at an early stage to avoid unpleasant surprises later on. Active support in the area of taxation is also of great importance in order to be able to optimise the tax position and property transactions financially.
If you are considering transferring your property portfolio to the next generation, it is possible, under certain conditions, to apply the business succession rule to a donation. Whether the business succession rule can be applied to the transfer of your real estate is different in each case and very dependent on the actual situation. In addition, it is important to prepare for the business succession rule at an early stage, because the exemption in income tax is, for example, linked to an employment requirement of at least three years for the recipient. The burden of proof to apply the business succession rule lies with the taxpayer. A good substantiation and good tax advice is therefore crucial.
The main rule is that the sale of immovable property is exempt from VAT, but in a number of cases the supply of immovable property is compulsorily subject to VAT. In that case, in principle, an exemption from transfer tax applies. This applies, for example, to buildings that are delivered before, on or no later than two years after the time they are first used. When there is a taxed performance for VAT, you can also deduct the VAT on the costs.
The VAT on costs can also be deducted for certain uses of the property, provided that you are going to use the property for VAT taxed performances, for example the renting out to a VAT entrepreneur.
When you use a property for your business activities, you can write off the purchase value until the so-called fiscal floor value is reached. This means that you pay less income or corporation tax. In addition, the situation may arise that the value of the property itself has decreased due to, for example, developments in the property market. If there is a sustainable and substantial drop in value, it is possible, based on good business practice, to write down the property, which can lead to further tax savings. In the latter case, however, it may be that you have reached the bottom value for tax purposes and may no longer be able to write off on the property until you reach the bottom value again.
The specialists of HVK Stevens are specialised in advising entrepreneurs with real estate, for example the director-major shareholder. Thanks to our multidisciplinary teams of tax experts and civil-law notaries, among others, we can also take care of the execution and implementation of our advice.
HVK Stevens professionals have legal, tax and financial knowledge and experience