Real Estate Income Tax in the Event of Inheritance

Real Estate Income Tax

The real estate income tax (ImmoESt) has been levied since 2012 on profits from the sale of land. The ImmoESt only applies to transactions involving acquisition and transfer for consideration. In the case of gratuitous transactions such as inheritances or gifts, it does not initially apply, unless the property is sold later.

The real estate income tax is a tax on the profit arising from the sale of land or real estate in Austria. It is generally 30% of the profit made.

Exceptions to the Real Estate Income Tax

• Main residence exemption
• Manufacturer exemption
• Expropriations
• Certain exchange transactions

You can find more detailed information about the exceptions to the real estate income tax, the tax rate and the payment of the tax here.

Sebastian Riedlmair
Harlander & Partner Attorneys „Gerade bei Schenkungen und Erbschaften wird die Immobilienertragsteuer häufig übersehen. Eine frühzeitige rechtliche Beratung hilft, unnötige Belastungen zu vermeiden.“

Gifts and Their Tax Consequences

If a property is gifted, it is a gratuitous transaction. Since the donor does not receive a purchase price and therefore does not make a profit, the initial impression is that no tax is payable. But beware:

Later sale or rental: As soon as the donee sells the property or generates income from it, real estate income tax may be payable. The decisive factor is therefore whether an economic return arises from the use.

Mixed gift: Children often pay their siblings compensation if only one of them receives the property. If this payment exceeds 50% of the property value, the transaction is no longer considered a pure gift for tax purposes. In this case, the transfer is treated as a sale and real estate income tax is payable.

Real Estate Income Tax in the Event of Inheritance

Similar rules apply in the event of inheritance as for gifts. An heir often takes over a property and financially compensates the other heirs. Whether real estate income tax is payable depends primarily on the type of compensation payment:

Compensation from the estate: If the payment is made directly from the inherited assets, this is referred to as a tax-neutral inheritance distribution. In this case, no real estate income tax arises.

Compensation from private assets: If the favored heir pays the compensation from their own pocket, it depends on the inheritance quota, i.e. the share that everyone would have received without an agreement. If the payment exceeds 50% of the inheritance quota, the transaction is treated as consideration for tax purposes and real estate income tax is due.

Your Benefits with Legal Assistance

The real estate income tax is a complex topic, especially when it comes to gifts or inheritances. Even small differences in compensation payments or in the handling of the estate determine whether a tax liability arises or not.

Frequently Asked Questions – FAQ