Private sale transaction: High-priced asset as an object of daily use

Private sales transactions involving other economic goods are subject to taxation as other income if the period between acquisition and sale does not exceed one year. This period increases to ten years if income is generated from these assets in at least one calendar year (Section 23 (1) sentence 1 no. 2 sentences 1 and 4 in conjunction with Section 22 no. 2 German Income Tax Act (EStG)). However, sales of items for everyday use are exempt from taxation. This undefined legal term is ultimately intended to assign only those assets to the non-taxable sphere that are typically subject to a loss in value due to economic wear and tear. In its decision of January 27, 2026 (case no. IX R 4/25) the German Federal Fiscal Court (BFH) clarified whether a high-priced motorhome can be classified as an item of daily use and whether its sale is therefore not subject to taxation as a private sale.

Facts of the case

In the case in question, the plaintiffs, who are spouses, purchased a motorhome in June 2020 for a purchase price of approximately EUR 323,000 and rented it out on a daily basis to a limited liability company (GmbH) whose sole shareholder and managing director is the wife. After less than a year, in March 2021, the spouses sold the motorhome at a loss. The tax office classified the income from renting out the motorhome as other income in accordance with Section 22 no. 3 EStG and did not allow the declared income-related expenses surpluses for the years 2020 and 2021 to be offset against losses and deducted. It classified the sale of the motorhome as a private sale and recorded a capital gain in the income tax assessment for the disputed year 2021, adding the depreciation allowance that had not become tax-effective. The BFH ultimately disagreed with this.

Decision

Although the profit from the sale of the motorhome is generally taxable under Section 23 (1) sentence 1 no. 2 EStG, it is exempt from taxation due to the exemption for items of everyday use. According to established case law (BFH, decisions of October 29, 2019, case no. IX R 10/18 and of May 24, 2022, case no. IX R 22/21), these include economic goods which, when viewed objectively, are primarily purchased for use and are subject to depreciation or have no potential for appreciation in value; daily use is not required. This interpretation of the law, which was also upheld by the lower court, is in line with the legislative intent to exclude from the scope of taxation of private sales transactions those items whose sale generally only serves to recoup part of the seller's own acquisition costs through resale.

When assessing whether an asset can be considered an item of everyday use in individual cases, the BFH emphasizes the binding effect of the lower court's decision, which only ceases to apply in the event of violations of laws of logic or general rules of experience. However, it also confirms that the value of an economic asset is not a suitable criterion for classifying it as an item of everyday use. This can therefore also include an economic asset that would be considered high-priced (“luxury good”) by the average observer. This is because the taxpayer can also use such an asset as an object of regular use with a corresponding depreciation in value. It is irrelevant whether the taxpayer uses the economic asset himself and/or – as in the case in dispute – as a source of income.

Notice:

The further development of its case law on the requirements for an item of everyday use by the BFH is to welcome. Against the backdrop of the now broad definition of the term, sales of (movable) assets in the high-price segment - such as motorhomes, sailing yachts, motorboats - may remain irrelevant for tax purposes under certain conditions. The BFH ruling is a positive sign for taxpayers who generate income from such assets within the ten-year extended disposal period in at least one calendar year. Conversely, it means that losses from the sale of such assets cannot be used to offset taxable capital gains. The reaction of the tax authorities and legislators remains to be seen.

A practical example of this is the so-called spouse-intermediary model, which the BFH had already approved in its decision of September 29, 2022 (case no. V R 29/20). It works as follows: In the first step, a person close to the entrepreneur but financially independent, usually the spouse, acquires a movable asset, such as a vehicle. In the second step, it is leased to the entrepreneur. If the asset is subsequently sold, there is no income tax liability if it is an item of everyday use, regardless of whether the 1- or 10-year speculation period has been observed. Spouse-intermediary models offer considerable potential but must be carefully planned in light of ongoing income and/or VAT issues. If you have any questions on this subject, please do not hesitate to contact us.