In its decision dated 29 March 2017, the Austrian Supreme Administrative Court (Verwaltungsgerichtshof) clarified that the tax exemption for the sale of a primary residence is to be interpreted as being limited to the building and the plot of land usually required as a building site.  

According to the Austrian Income Tax Act, income derived from the sale of real estate not being a business asset is subject to a flat tax of 30%. However, income from the sale of houses and condominiums as well as the underlying plot of land is, inter alia, taxexempt if the condominium has been used as a primary residence (Hauptwohnsitz) for an uninterrupted period of at least (i) two years between the acquisition (construction) and the sale; or (ii) five years within the last ten years before the sale. Moreover, the taxpayer must move out of the primary residence. 

According to the Austrian Income Tax Act, income derived from the sale of real estate not being a business asset is subject to a flat tax of 30%. However, income from the sale of houses and condominiums as well as the underlying plot of land is, inter alia, taxexempt if the condominium has been used as a primary residence (Hauptwohnsitz) for an uninterrupted period of at least (i) two years between the acquisition (construction) and the sale; or (ii) five years within the last ten years before the sale. Moreover, the taxpayer must move out of the primary residence.  

In the case at hand the taxpayer sold his house including a plot of land of more than 3,600 square metres and applied the tax exemption to the entire gain from the sale. The tax office did not accept this and argued that the portion of the gain that is attributable to the plot of land exceeding 1,000 square metres should be subject to income tax. According to the tax office only the plot of land that is usually required as a building site (Bauplatz) should be tax exempt. Since in general 1,000 square metres are sufficient for a building site, the tax office denied the application of the tax exemption to the exceeding square metres. Even though the Federal Tax Court (Bundesfinanzgericht) followed the taxpayer, the Austrian Supreme Administrative Court (29 March 2015, Ro 2015/15/0025) came to the conclusion that the extent of the tax exemption is indeed limited to the plot of land usually required as a building site (which is to be determined pursuant to customary practice).