Subsidies: Experts: Abolish tax advantages for property owners

Subsidies
Experts: Abolish tax breaks for property owners

Three renowned scientists are in favor of abolishing tax privileges for property owners. Photo: Robert Günther / dpa-tmn

© dpa-infocom GmbH

The term “concrete gold” has become established for real estate. According to an analysis by three prominent experts, the German state also contributes to the gold shine – in the form of tax privileges for property owners.

Three renowned scientists are calling for the abolition of tax privileges for property ownership.

Ifo President Clemens Fuest, Johanna Hey, head of the tax law institute at the University of Cologne, and the Mannheim economist Christoph Spengel criticize investments in real estate in Germany for decades.

“This tax subsidy leads to the misdirection of investments and the accumulation of real estate in the hands of a few people and companies,” says the article published on Wednesday.

According to Fuests, Heys and Spengel, the tax advantages also contributed to the sharp rise in property prices. Real estate ownership therefore makes up more than half of the total wealth in Germany, and the wealthiest ten percent of German households own 70 percent of the real estate that they do not use themselves.

The three scientists argue that “comparatively minor legislative corrections” in income tax, trade tax, inheritance tax and real estate transfer tax could remedy the disincentives.

Specifically, they propose, among other things, to tax real estate sales higher. Anyone who buys a property and keeps it for more than ten years does not yet have to pay tax on the profit from a resale. “This means that treatment remains unequal compared to other types of assets such as equity investments,” criticize Fuest, Hey and Spengel.

According to the analysis of the three tax law experts, large real estate stock corporations have so far benefited from an exemption of their rental income from trade tax. The scientists also consider this tax privilege to be superfluous.

dpa

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