Tax Considerations When Selling a Multi-Family Building

Why tax considerations matter when selling a multi-family building

The sale of a multi-family building can have tax implications that owners should be aware of. The following information is for general orientation only and does not replace tax advice. For legally binding guidance, a tax advisor or specialist attorney must always be consulted.

1. The ten-year holding period in private ownership

When a multi-family building is held in private ownership, the so-called ten-year holding period may apply. In many cases, a sale that takes place more than ten years after the original purchase may be tax-free under certain conditions.

Different rules apply to rented units than to self-occupied ones. These details must always be reviewed with a tax advisor while the strategic aspects of the sale are outlined in our main guide to selling a multi-family building in Berlin without an agent.

2. Properties with commercial units

Many multi-family buildings in Berlin include a commercial share such as shops or small offices on the ground floor. Whether and how this share has tax relevance depends on various factors including usage, income structure, and accounting treatment. An individual assessment is essential.

3. Depreciation, residual values and documented renovations

Over the years, owners often claim depreciation (AfA). When selling, residual values and documented renovations may play a role. The implications vary from one property to another and must be evaluated by a tax expert.

4. Sales from business assets

If the building is owned by a company or forms part of business assets, the tax consequences differ significantly from those of a private sale. Profit determination and accounting principles become relevant.

5. Berlin-specific aspects

Berlin does not have its own property sale taxes, but local factors such as conservation areas or potential district pre-emption rights can influence timing. A delayed sale, for example, may affect the ten-year holding period or related planning considerations.

6. When owners should always consult an expert

Professional tax advice is essential in the following cases:

• if the property is held within business assets
• if major renovations or modernisations were carried out
• if the building includes commercial units
• if the ten-year holding period is not clearly fulfilled
• if multiple owners are involved

A tax advisor can evaluate the specific circumstances and provide legally binding guidance which cannot be given in a general overview.

Next step

A solid valuation is the starting point for any sales decision and helps to understand tax considerations in context. Use our digital valuation tool to receive an instant result based on location, rental income, conservation status and building characteristics, and read our article How Buyers Perform Due Diligence on a Multi-Family Building to understand which documents are particularly important in the review process.