All is not lost when selling a condominium at a loss. Here you can find out how to minimize losses and costs while saving on speculation tax and taking advantage of tax benefits.
Where is the sale of a condominium most likely to result in a loss?
In rural areas, including in eastern Germany, the real estate market has increasingly deteriorated in recent years. Unlike in conurbations and booming cities, you are more likely to lose money when selling a property, including a condominium in a rural area. The group of potential buyers for your condominium is likely to be made up of people who do not have a lot of equity, such as young families who are urgently looking for relatively inexpensive living space. Do not set the price of your condominium too high, even if you expect to make a loss, so that you can realize a quick sale and avoid further losses.
Can there be advantages to selling a condominium at a loss with an estate agent?
If you are threatened with a loss when selling a condominium, it is advantageous to use a professional estate agent for the sale. The agent will be able to determine a realistic price and avoid a long, money-draining vacancy. The agent can give you valuable tips on how to minimize the loss. You will receive advice on how to save on selling costs and on legal and organizational aspects.
What costs can I expect when selling a condominium at a loss?
Try to keep the costs as low as possible.
Calculate the sale of your property precisely. You may still be able to carry out simple repairs that will significantly increase the selling price. It may still be possible to make a profit on the property in this way and turn the tide.
If you are selling, an energy performance certificate is mandatory these days. You will need to budget around 500 euros for this. When selling, you must have land charges deleted from the land register by a notary. You will bear the costs for this if the property is still encumbered with a loan. You should also bear in mind that a prepayment penalty could be incurred for the redemption of your property. This prevents you from using the financial gain from the sale of your condominium to simply pay off the loan.
How does the speculation period affect the sale of a condominium at a loss?
Normally, someone who resells a property after less than ten years has to pay the so-called speculation period on the profit. The speculation period does not apply to owners who live in their home themselves.
However, no speculation tax is payable on the sale of a condominium at a loss, as no profit was made. The speculation tax would actually be calculated individually on the basis of the personal tax class and the sale price. The speculation tax always relates only to the profit made on the sale of the property.
How can you save tax by selling a condominium at a loss?
If you sell another property at a profit, you would have to pay speculation tax on this if the sale took place more than ten years after the purchase of that property. However, you can offset that profit against the loss made on your condominium and thus reduce the speculation tax. Even if the loss-making transaction was in the previous year, you can offset it. In the same way, you can offset a loss-making transaction from the following year against this year’s profit and thus save tax.
Conclusion
If you are threatened with selling a condominium at a loss, it is best to have an estate agent at your side. They can help to keep losses and costs to a minimum.
If you sell your condominium at a loss, no speculation tax is due. What’s more, you can offset the loss against the profits from other property sales.
