No hobby activity in the case of an early sale of a property

A fundamental requirement for ruling out hobby activity is that a positive earning potential can be demonstrated through a submitted profitability forecast. This means that a cumulative surplus must be achieved over a certain observation period. Since January 1, 2024, this period is 25 years for small-scale rentals (e.g., rental of condominiums or single-family homes) and 30 years for large-scale rentals (e.g., rental of an entire apartment building).

If the profitability forecast shows a positive outcome, an early sale of the property—before an actual surplus has been achieved—does not change the fact that the activity is not considered hobby-based. Accordingly, loss carryforwards (excess advertising expenses) must be recognized by the tax office.

What matters is that the property was not primarily acquired with speculative intent and that an early sale (before the end of the observation period or before achieving a cumulative surplus) was not planned.

VwGH 03.09.2024, Ra 2023/13/0121