Commercial real estate trading refers to an activity in which real estate is purchased or sold with the intention of generating regular profits. The decisive factor is not the designation of the seller, but the economic orientation and intention to repeat the transaction.

In commercial trading, capital gains are no longer treated as private sales – and therefore tax-free – by the tax office. Instead, the income is subject to income tax or corporation tax, and trade tax may also be payable, as well as VAT in the case of commercial sales.

What rule of thumb can be used as a guide? Generally speaking, you can sell up to three properties within five years tax-free. If you have rented out a property and owned it for ten years (note speculation periods), this rule does not apply. If the property was used by yourself, this period is reduced to three years. 

As the distinction between a holding period of less than 10 years is often case-dependent and complex from a tax perspective, a tax advisor or specialist tax lawyer should be consulted, especially in the case of multiple sales or if inheritance/gifts are involved.

In the above case, the couple should therefore be able to sell the 6 flats tax-free over the next 3 years, as the ten-year holding period has expired and it can be assumed that the sale is for the purpose of securing their retirement.

Conclusion: Commercial real estate trading occurs when the sale of land or buildings is no longer classified as private asset management but as a commercial activity; this has significant tax consequences and is based on indicators such as the intention to sell, the number of properties and the holding period.