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 real estate portfolio to the next generation, it’s possible, under certain conditions, to apply the BOR to a gift. Whether the BOR can be applied to the transfer of your real estate depends on the specific circumstances of each case. Additionally, it’s important to plan for the BOR in advance, as the exemption in income tax, for instance, is linked to an employment requirement of at least three years for the recipient. The burden of proof for applying the BOR lies with the taxpayer. A strong justification and sound tax advice are therefore crucial.
The general rule is that the sale of real estate is exempt from VAT. However, in some cases, the transfer of real estate is required to be subject to VAT. In such instances, there is typically an exemption from real estate transfer tax. This applies, for example, to buildings delivered before, on, or no later than 2 years after the first date of use. When there is a taxable supply for VAT purposes, you can also deduct the VAT on expenses.
VAT on expenses can also be deducted in certain cases of real estate usage, provided that you intend to use the real estate for VAT-taxable supplies, such as renting to a VAT-registered business.
When you use a property for your business, you can depreciate it based on the purchase price until the so-called tax floor value is reached. This reduces your income or corporate tax payments. Additionally, there may be situations where the value of the real estate itself has decreased due to developments in the real estate market. In the case of a substantial and lasting decline in value, it’s possible, according to the principle of “good commercial practice,” to write down the value of the real estate, leading to further tax savings. In this latter case, you may have reached the tax floor value, and you might not be able to depreciate further until the value rises above the floor value again.
The specialists at HVK Stevens are well-versed in advising entrepreneurs with real estate, including directors and major shareholders (DGA). Thanks to our multidisciplinary teams of tax experts and notaries, we can also ensure the execution and implementation of our advice.
HVK Stevens professionals have legal, tax and financial knowledge and experience