NNever before have there been as many employees in the home office as there are now. The cost of a home office is only tax deductible under limited conditions. However, this can also turn into a disadvantage.
Caution is advised if the home is sold at a profit within ten years and a study has been taken into account for tax purposes. The Baden-Württemberg Finance Court recently ruled on such a case by judgment of July 23, 2019 (file number: 5 K 338/19).
The plaintiff was a teacher who maintained a study in her condominium, which she acquired in 2012, and which was taken into account at 1250 euros a year. In 2017, she sold the condominium at a profit. In principle, a profit from the sale of a condominium is subject to income tax, provided that the period between the purchase and the sale does not exceed ten years. This was the case in the judgment.
Inseparable or not?
However, the sale is not subject to income tax if the apartment was used between the acquisition and sale exclusively for own residential purposes. The tax office was of the opinion that a study is not used for residential purposes but for professional purposes and that the part of the capital gain that is attributable to the study would therefore be taxable.
The Finanzgericht Baden-Württemberg contradicted this with the judgment, since the study belongs to the inseparable and not individually transferable part of the apartment and only made up an insignificant part of the apartment. Since the sale of the apartment is tax-free, this also applies to the study.
However, the judgment has not become final, and the revision to the Federal Fiscal Court (Az. IX R 27/19) has been approved because the decision deviates, among other things, from the case law of the Finance Court in Münster, which in a similar case, the profit on the study has been assessed as subject to income tax.
In the tax literature, the majority of the authors – including the federal finance judge – take the view that the sale of the study is taxable in comparable cases. With this in mind, when planning a planned sale within ten years, you should check whether you have foregone using a study as advertising costs in the previous years.
The author is a tax advisor at KPMG.