The Supreme Administrative Court (KHO) has ruled that even a short-term rental of a home interrupts the mandated continuous two-year period of residence — which is one of the conditions that enables the tax-free sale of a home.
The decision stems from a case examined by the court, in which a couple had rented out their newly-purchased home for a two week period during their vacation before they used the apartment as their permanent residence.
The court ruled when the couple started renting out the apartment, they effectively began to use the flat as an income generating activity.
According to the Tax Administration, homeowners do not need to pay taxes on the sales of their permanent residences if they — or their spouse and children — have permanently lived at the property for at least two years.
In other cases, according to the tax office, profits made on such sales are considered capital gains and subject to taxation.
In its decision the Supreme Administrative Court stated that since the dwelling was not being used as the couple's permanent residence according to tax laws, it effectively meant the two-year period of uninterrupted residence was effectively interrupted.
The court noted that the ruling was not affected by the short duration of the rental period in question.