House lotteries - finance is not a spoil-sport

Recently, house sales by private individuals have made headlines and shown a purportedly successful way of achieving an attractive return on a property despite the poor market situation, which would not be possible through sale at present. The low selling price compared to the value of the property and the relatively high profit potential (comparatively only 1 in 8,145,060 with Lotto 6 from 45) represent appropriate incentives for interested parties. The sometimes unclear legal, tax and criminal consequences of gambling However, they must be taken into account for the property auctioneer and for the winner.

The BMF has stated in a statement clarified, that House auctions by private individuals under certain conditions Not against the gambling law violated. Since the prize amount (bet per game) regularly exceeds €0.5 per game, it is necessary that no "outselling" takes place and that no "banker" is involved. The second condition is undoubtedly met, since in the lottery the game participants (betters) do not play against the winning private individual. In order for no "outselling" to take place, the Key feature, that the lottery of houses not entrepreneurial takes place and the prize draw is carried out by the private individual only for a single object without the intention of repetition and therefore not carried out in a sustainable manner.

As a legal consequence of the fees, there are the Grunderwerbsteuer (GrESt), the Grundbuch-Inschriftgebühr and also a Fee for gambling contracts one - the lottery fee even if the draw does not actually take place, for example because the minimum number of tickets sold has not been reached. Basis for calculation: 12%-digit fee is the total value of all bets made according to the schedule (lot prize x number of laid down Therefore, at least 12% of the revenues must be returned in the form of fees! GrESt i.e. 3.5% or. Grundbucheintragungsgebühr In particular, 1% the result is calculated by multiplying the lot price by the number of all sold lots or from the triple unitary value of the object, if it is higher. Those who pay the GrESt or the land registry entry fee are, in individual cases, subject to the terms of the lottery.

From a tax perspective, there are no consequences for the individual winning the prize unless the Ground for speculation is fulfilled. The property has been owned for more than ten years or has been owned for at least two years continuously as the main residence If the house is sold, no tax is due. The profit of the house itself does not result in a tax obligation - only in the event of resale or auction by the lucky winner would there be a tax obligation within the scope of the speculation period.

In contrast to the unambiguous tax treatment, possible Criminal legal consequences still unclear (Section 168 of the Criminal Code, prohibiting the holding of gambling games, with a penalty of up to 6 months imprisonment). If the winner intends to benefit oneself or another person financially, the situation can become very serious. The higher the revenue generated exceeds the actual market value, the more likely there is a violation of criminal law norms.

Overall, therefore, the implementation of House auctions for several reasons not very safe. The former owner may achieve a significantly lower value than expected and must also bear fixed costs (notary fees, settlement fee, etc.) and the buyer of the lot will not be refunded the full purchase price, unless a draw takes place, for example due to processing fees.

Image: © Tom Mc Nemar - Fotolia