Challenges of estate planning for commercial real estate

Case 1

Facts

Mr. Hoch is a self-employed architect. He runs his architectural office as a sole proprietorship under the firm Hoch Architekten. He uses 70% of his property as fixed assets necessary for business operations and 30% as a family home. Karl, the son of Mr. Hoch, is also an architect and works for his father. The daughter does not work in an architectural office.

Questions: Tax consequences of the death of Mr. Hoch?

1. Heirs continue the business together
2. Son continues the business alone
3. Heirs sell the architectural office

Question

Karl is assigned sole ownership of the architectural office in his will. Does the tax treatment change compared to 2. ("son continues to run the business alone")?

Case 2

Facts

Mr Hoch decides to reduce his self-employment and to give it up completely in two three years. He transfers the property to his private assets and demands a tax deferral in the sense of Art. 18a DBG. One year later Mr. Hoch dies unexpectedly.

Questions: Tax consequences at the time of inheritance

1. Heirs do not continue the business
2. Son continues the business alone

Case 3

Facts

Mr Lange is a building contractor. During his 30 years of activity he has built and partly also sold several properties himself. On the date of his death, he owned four properties which were part of the business assets.

Issues: Joint takeover of the properties by his heirs

1. GM or PV to the heirs?
2. Continuation or abandonment of real estate trading?
3. The heirs cannot agree on whether to sell the properties. This is the fifth anniversary of the death of Mr Lange.

Question

The son of Mr. Lange is also active in the construction industry and already owns his own properties. He takes over the four properties and finds the other heirs. Any tax implications?

Variant

During his lifetime, Mr. Lange converts his sole proprietorship into a stock corporation. The four properties are now also owned by the stock corporation. Mr. Hoch has been dying for 3 years since the transformation.

Questions about the variant

1. The daughter and son share the shares equally - tax consequences?
2. The subsidiary sells its shares after a 3-year holding period - tax consequences?

Case 4

Facts

Mr. Brunner is the sole shareholder in a real estate company. This company owns four apartment buildings, which Mr Brunner manages himself. On his death, Mr. Brunner leaves behind his wife and two children. The heirs divide the shares in accordance with their legal inheritance entitlement.

Question

What are the tax consequences?

Variant

After four years, the daughter decides to sell her shares to her brother.

Question on the variant

What are the tax consequences?