Quick ReadThe definition of a professional real estate dealer is identical under income tax law and real estate gains tax law, but is applied differently in practice.
1. Income Tax Law
Commercial real estate trading occurs when someone systematically buys and sells real estate with the intent to make a profit. The Federal Supreme Court bases its determination on various known indicators. The overall circumstances of the individual case are decisive, but in exceptional cases, the presence of a single indicator may suffice. A high proportion of debt capital is a key factor. Despite its significance, it remains unclear in detail exactly how the debt-to-equity ratio should be calculated, whether the remaining assets and their refinancing must be taken into account, and which values (market value rather than tax value) should be used for this purpose. According to case law, criteria such as professional relevance or expertise play a secondary role, but are often invoked when other indicators are lacking or weak.
Legal uncertainties also exist for a real estate dealer regarding the remaining properties previously held as private assets. Here, recent Federal Supreme Court case law on the interest in legal protection could provide a basis for an appeal and thus for the court to hear the case. And what about the approach, in the case of large real estate portfolios, of transferring them as a business into business assets and then contributing the assets and liabilities to a corporation in a tax-neutral manner? While the most recent Federal Supreme Court ruling of September 19, 2025, affirms this approach in the specific case at hand, its reasoning is not internally consistent and would be highly restrictive if applied literally.
2. Real Estate Gains Tax Law
In contrast, in the area of real estate gains tax, classification as a real estate dealer results exclusively in a tax advantage—at least when viewed in isolation from the real estate gains tax consequences. Practice is guided by the Federal Supreme Court’s list of criteria but interprets it in a more concrete and type-specific manner. A distinction is made between dealers (short holding period, many transactions) and developers (value-adding activities, e.g., construction or renovation).
Tax benefits are granted through a two-stage assessment. The seller must qualify as a real estate dealer from a subjective standpoint, and the property being sold must additionally qualify as a trading asset.
3. Differing Practices
Despite alleged equivalence, there are significant differences: In income tax law, a single indication is often sufficient to presume commercial activity.
In real estate gains tax law, a comprehensive assessment is conducted; a single sale is not sufficient. Furthermore, there is established case law in this area, which provides legal and planning certainty—in contrast to the often inconsistent practice of the Federal Supreme Court in income tax law.
4. Criticism and Outlook
The Federal Supreme Court emphasizes that tax-exempt capital gains are only exceptional—a significant shift in favor of taxation.
This effectively turns a legal principle (tax exemption of private capital gains) into an exception. Legal clarification and standardization of practice are required.
