Main Residence Exemption for Farm Buildings

Capital Gains Tax Main Residence Exemption for Agricultural and Forestry Buildings

Gains from the sale of real estate are generally subject to Austrian real estate capital gains tax (ImmoESt). An exception applies to the sale of owner-occupied houses or condominiums that serve as the taxpayer’s main residence. The exemption is available if the property served as the seller’s main residence either continuously from acquisition to sale for at least two years, or for at least five consecutive years within the last ten years prior to the sale. In addition, at least two-thirds of the total usable floor area must be used for the taxpayer’s own residential purposes. Where these requirements are met, the main residence exemption applies and no real estate capital gains tax is payable upon disposal (for land up to a maximum of 1,000 m²).

Special Case: Agricultural and Forestry Buildings

Agricultural and forestry properties represent a special case. Traditional farmsteads often consist of a residential building connected to a farm building, such as a barn, stable, or threshing floor.

Where a residential building is attached to a farm building and together they form a structural unit, the residential building may nevertheless be treated as a separate residential property, provided that at least 20% of the total usable floor area is used for residential purposes and one of the following situations applies:

A residential building was added to an existing farm building. Doors connecting the buildings or a vestibule serving as a connection are not detrimental in this regard.

The residential and farm buildings were constructed together, but the structural design clearly indicates from the outside that they do not constitute a single building, despite the physical connection. Again, connecting doors or a connecting vestibule are not detrimental.

The residential and farm buildings were constructed together as one building complex with a common roof and façade. Nevertheless, they are regarded as two separate buildings if all of the following conditions are met:

• A fire wall separates the residential and farm sections.
• There is no interlocking arrangement of residential and farm premises (for example, farm rooms on the ground floor and living quarters on the upper floor).
• The intended use of the respective areas as residential or farm premises is clearly identifiable based on objective criteria and is also recognisable from the outside.

Consequences for the Main Residence Exemption

In these special circumstances, the generally applicable requirement that two-thirds of the total usable floor area must be used for residential purposes may be disregarded when determining whether a tax-exempt owner-occupied residence exists. This is because, subject to the conditions outlined above, the residential portion is treated as a separate residential building.

Accordingly, provided all other requirements, particularly the relevant holding and occupancy periods, are satisfied, the main residence exemption may be granted for the residential building forming part of the agricultural or forestry property.