Listed buildings are aesthetically pleasing in terms of their architecture and exude a certain charm. However, their listed status means that there are some legal regulations to be aware of. These also apply to any renovation work. Selling such a property is therefore not easy, especially when it comes to turning a profit from the sale. So, what are the key factors in ensuring a smooth and successful sale?
Owners who have invested a lot of money in extensive renovation or modernisation work on their listed property are granted tax privileges by the German state. If the value of the property has thereby been increased, the owner can – in principle – charge more money for it when selling up. However, owners wishing to sell at a profit commonly face the problem that the property sells at a much lower price. The worst-case scenario is that their listed property proves to be a failed investment. But why?
Tax relief? – Not for new owners!
New owners no longer benefit from tax privileges such as the AfA (‘Absetzung für Abnutzung’, which translates as ‘depreciation for wear and tear’). This is tax relief on the purchase and manufacturing costs for a listed property. Many potential buyers are therefore not willing to spend lots of money on listed buildings. Added to this is the fact that maintaining a listed property is often considerably more expensive than a non-listed building. Any construction work on the property is also subject to stringent official regulations. Despite this, the owner is still legally obliged to maintain the habitable condition of such a property.
Important sales documents Verkaufsdokumente
In addition to the usual documents required for a property sale, owners must provide additional documentation when selling a listed building. The listed status certificate issued by the applicable listing authority is especially important. A competent estate agent will know which other documents are required for the respective listed property, and where to obtain these. They will also support the owner in procuring these documents.
What owners should be aware of
Anyone selling a listed property must bear in mind the statute of limitations for capital gains. Within this 10-year period, an owner must pay tax on any profit generated through the sale of their listed property. The AfA – or more precisely, the financial investment in the renovation work on which tax relief was claimed within the applicable period of the statute of limitations – is now also classed as profit. Anyone with questions regarding the legal and financial aspects of selling their listed property is well advised to consult a property expert. Despite the many challenges that a listed building poses, a professional estate agent will be able to use their negotiating skills to achieve a market-appropriate sale price for the property.
Do you have questions regarding the sale of your listed property? Then get in touch with us! We are happy to advise you!
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Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.
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