ImmoESt Main Residence Exemption for Agricultural and Forestry Buildings

Profits from the disposal of real estate are generally subject to real estate earnings tax (Immobilienertragsteuer, ImmoESt). An exception is the disposal of owner‑occupied houses or condominiums that serve as the main residence. The tax exemption applies if the owner‑occupied property has been used by the seller as a main residence for at least two years or continuously for at least five years within the last ten years from acquisition to disposal. In addition, at least two‑thirds of the total usable floor area must be used for the owner’s own residential purposes. If these conditions are met, the main residence exemption applies and no real estate earnings tax is payable on the sale (for land up to a maximum of 1,000 m²).

Special case: agricultural and forestry buildings

Agricultural and forestry buildings constitute a special situation. Traditional farmsteads often consist of a dwelling house and an attached utility building, such as a barn or a threshing floor.

Where the dwelling house is attached to the utility building and forms a structural unit, a proportion of at least 20 % of the total usable floor area being used for residential purposes means that, despite the structural connection, the dwelling is to be regarded as a separate residential building in the following cases:

• A dwelling house has been added to an existing utility building (connecting doors or a vestibule serving as a link are irrelevant).
• Dwelling house and utility building were newly constructed together, but the architectural design makes it apparent from the outside that they do not constitute a single building (connecting doors or a vestibule serving as a link are irrelevant).
• Dwelling house and utility building were erected together in a single building block (single roof, uniform façade). Despite this design, they are to be regarded as two separate buildings if the following separation between dwelling and utility building exists:
• A fire wall between the dwelling and the utility building,
• no interleaving of residential and utility rooms (e.g. utility rooms on the ground floor and residential rooms on the upper floor), and
• the purpose of the rooms, whether residential or utility, is clearly defined by objective criteria and is evident from the outside.

The generally applicable two‑thirds threshold for own residential use can therefore be disregarded in these special cases when assessing the tax‑exempt owner‑occupied property, because, according to the stated conditions, the dwelling is to be considered a separate residential building. The main residence exemption is to be granted in this case – provided all other requirements, in particular the time limits, are also met – for the agricultural or forestry dwelling building.