I am 24 year old software developer living in Germany. I am an expat here and I am about to receive my permanent residence (Niederlassungserlaubnis) in a year. I am very interested in investments mainly in real-estate. I was wondering whether there are any tax laws in Germany that are similar to like-kind exchange laws in the US irrespective of whether they are targeted at the individuals or Corporate holdings. Thank you.
Yes, under limited circumstances. Per §6b EstG you don't have to tax the profits from the sale (Veräußerung) of a business asset, if:
- the sold asset is land or a building or certain other assets
- you held the sold asset for the last 6 years
- you acquire an asset of the same type within 4–6 years (depends on the asset type)
- and possibly other conditions
More precisely, the replacement costs can be used as a tax exemption that you can apply in advance to the profits of a sale.
This is not useful as a tax loophole and has more to do with the concept of stille Reserven (hidden assets), which are assets that don't appear on the balance sheet. The value increase of real estate is a typical hidden asset under German accounting practices (which are quite unlike GAAP).
This stuff can get complicated, so definitely get an accountant to assist you.