Inheritance: Hotel top, parking garage flop?
Inherited a parking garage or hotel? Why it makes a difference for tax purposes
If business assets or shares in corporations (at least 25%) are given away or bequeathed, this can be very favorable from a tax perspective, sometimes even completely tax-free. However, not everything that belongs to a company is automatically tax-privileged. One example of this is so-called “administrative assets”.
What counts as administrative assets?
This includes, for example, real estate that is rented or leased out rather than used by the owner – such as warehouses, offices or parking garages. Such assets generally do not qualify for tax relief.
Federal Fiscal Court ruling: Parking garage is not a tax-privileged business asset
The Federal Fiscal Court (BFH) ruled on February 28, 2024 (case no. II R 27/21): A parking garage business that is run commercially also counts as administrative assets and is therefore not tax-privileged. The reason: The rental of parking spaces is considered a transfer of use – regardless of whether it is on an hourly or permanent basis.
Hotels continue to benefit (for the time being) – says the tax authorities
Interesting: Although the court has ruled more strictly, the tax authorities are sticking to their previous line. It stated in a letter dated 19.11.2024:
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Accommodation establishments such as hotels, guesthouses or campsites continue to be regarded as preferential business assets.
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However, the ruling on the parking garage applies in any case. A self-operated parking garage also falls through the cracks for tax purposes with immediate effect.
What does this mean in practice?
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Anyone who bequeaths or gives away a hotel or guesthouse still benefits from tax breaks.
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However, anyone transferring a parking garage – whether leased or self-operated – must expect that no tax reliefwill be granted.
Conclusion & recommendation for action:
Would you like to bequeath or give away business assets? Then make sure you check beforehand whether the assets are tax-privileged – and what exactly they are. The transfer of a hotel can be tax-free, but a parking garage can be expensive.
Our tip: Get tax advice before making a transfer – so you don’t get an unpleasant surprise from the tax office.
