Distinction between private and commercial land sales

If a property is sold from private assets, it is tax-free if 10 years have passed between acquisition and sale. Otherwise, there is a taxable speculative gain.
However, if the taxpayer occasionally sells a property, there is a risk of it being classified as "commercial property trading". There is no clear line regarding this in Austrian case law and administration. The German Federal Fiscal Court has now created the so-called "three-property limit" as a criterion for property trading. A property seller still remains tax-free if they have not sold more than three properties within 5 years. However, even then, commercial property trading may exist if the taxpayer does not prove that they had no intention of selling from the outset.

The following indications point to a Commercial property dealing

• Sale of the property before the start of construction
• Development of the plot at the buyer's cost or according to the buyer's wishes
• Short-term financing for the construction project
• Pre-contract for the sale of the property before completion
• Appointing an agent for sale during construction
• Pre-completion property sales

If the taxpayer credibly demonstrates that they had no intention of reselling the property in the near future at the time of its purchase or the subsequent commencement of construction, they can rebut any indications of commercial property trading.

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