Main residence exemption – The power of disposition must be in temporal connection with the purchase contract, according to the BFG

Legal basis for the main residence exemption

An exception to the real estate transfer tax (ImmoESt) that is typically levied on private property sales exists when the conditions for the main residence exemption are met. On the one hand, the income from the sale of single-family or apartment homes, including land (up to 1,000 m²²) exempt from taxation if they have served as the primary residence for at least two years continuously from the time of purchase or manufacture until the time of sale. On the other hand, the primary residence exemption applies if the property has served as the primary residence for at least 5 years continuously before the sale within the last 10 years and the primary residence is relinquished.

Groundbreaking case before the BFG: Purchase with reserved right of residence

The BFG (GZ RV/6100356/2024 dated 20.2.2026) had to deal with a case in which a taxpayer had purchased a property with a purchase contract from April 2013 (grundbucheintragung in November 2013, whereby civil-law ownership was acquired), whereby the seller had granted a contractual right of residential use of around 10 years. In fact, the seller only used the apartment until January 2016, so the taxpayer and his family were able to use the property as their main residence from the end of January 2016 onwards. In August 2020, the property was sold for a significantly higher price – the taxpayer gave up their primary residence and wanted to claim the main residence exemption. However, this request was rejected by the tax office and instead the sale process was subjected to the special tax rate (ImmoESt) % of 30.

Definition of the acquisition date and economic ownership

Regarding the question of whether the main residence exemption applies – the option of five years of use within the last 10 years before the sale was not met – the BFG focused in particular on the concept of acquiring a property. In principle, the date of conclusion of the civil law obligation agreement (April 2013) must be taken into account; typically, as in the present case, the transition of civil and economic ownership coincide. With economic ownership, there is particularly the chance of value increases and the risk of value decreases – despite the seller’s right of use, the economic ownership of the property belonged to the buyer.

Exceeding the building and tax tolerance periods

To claim the main residence exemption, the main residence must be established at the time of purchase of the (habitable) own-home – even in the case of a tolerance period of 12 months that cannot be interpreted rigidly in the case law, the exemption cannot be claimed from the BFG after January 2016, as the main residence was only established after almost three years (and therefore not after the purchase or construction of the own-home).

Lack of temporal context in the exercise of power

Furthermore, the argument put forward by the taxpayer at the meeting that the main residence exemption should be based on the date from which the property is actually usable was also more closely analyzed. The BFG concluded that, when based on actual control, the main residence exemption could in principle also be applied even if the main residence is not established until after the conclusion of the purchase agreement. However, a reasonable temporal relationship between the date of acquisition and the conclusion of the binding transaction must then exist – in the literature, a period of approximately 6 months is assumed. Following the BFG’s conclusion, the temporal relationship can be attributed to the fact that the main residence exemption is not intended to exempt (significant) increases in the value of properties that fall outside periods of use as the main residence. This also applies to the present case, in which the move took place only around three years after the contract was concluded, thus constituting an excessively long period for the main residence exemption between the conclusion of the purchase contract and the actual transfer of the property.

Summary of the court decision

The other form of main residence exemption (5 years of main residence within the last 10 years), on the other hand, favors situations in which the right of disposal of property does not take effect until long after the acquisition of the property. However, since the prerequisites for this were equally lacking, the court denied the main residence exemption requested.

Image: Illustrative representation (generated by AI)