Deduction of maintenance reserve for real estate transfer tax no longer possible!

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The decision of the Federal Fiscal Court related to the legal question of whether a maintenance reserve taken over when acquiring part-ownership reduces the basis of assessment for real estate transfer tax pursuant to Section 9 (1) No. 1 of the German Real Estate Transfer Tax Act (GrEStG).

In the decision, the plaintiff acquired condominium ownership of four commercial units and nine underground parking spaces by notarized purchase agreement. The purchase agreement stated that the seller's share of the common funds (advances, maintenance reserve, etc.) would be transferred to the buyer upon transfer of ownership. The purchase price was €40,000. The tax office assessed the real estate transfer tax without reducing the assessment basis by the maintenance reserve of €14,815.19 in total. The appeal and the lawsuit were unsuccessful.

The Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that in the case of the acquisition of part-ownership, the agreed purchase price is not to be reduced by the pro rata maintenance provision as the basis of assessment for land transfer tax. This is because the basis of assessment for land transfer tax is the consideration pursuant to Section 8 (1) of the German Real Estate Transfer Tax Act (GrEStG). Pursuant to the wording of Sec. 9 (1) No. 1 GrEStG, the purchase price is to be used as the basis of assessment. 

The pro rata maintenance provision is part of the administrative assets of the condominium owners' association and thus not assets of the condominium owner, but assets of another legal entity. The condominium owners' association is a sui generis association with partial legal capacity and party capacity independent of the respective number of members. Pursuant to § 10 (7) sentence 1 WEG, it owns the administrative assets. The condominium owners have no share in the administrative assets which they can dispose of. A legal transaction acquisition of this position is not possible under civil law.

The decision is consistent in both its outcome and its reasoning. In view of the past increases in real estate transfer tax rates (e.g. in NRW to 6.5%) and the associated record income of the state from real estate transfer tax, the financial burdens on the purchase of residential property have risen sharply. Since the maintenance reserve may now no longer be deducted from the assessment basis for land transfer tax, this leads to a further increase in ancillary purchase costs.

Many tax offices have so far suspended appeals against real estate transfer tax assessments in which the deduction of the maintenance reserve was denied. Following this decision, however, it can be assumed that processing will be continued in the short term with a (negative) decision.

If you have any questions, especially about real estate transfer tax, you can send me an email ( or call my law office in Bonn at +49228-967624-0.