Facts
The taxpayer acquired two properties in U./ZH on January 23, 2003/February 28, 2003 for a total of CHF 32,250,000. He combined these and established condominium ownership in order to construct a new building or addition to an existing shopping center. On May 3, 2006, he sold a condominium unit and a co-ownership share to Y. AG for CHF 51,756,403 (incl. VAT) or CHF 49,320,000 (excl. VAT).
The local commission for real estate taxes determined a taxable capital gain of CHF 22,572,300 and imposed a real estate capital gains tax of CHF 9,018,320. The Tax Appeal Court of the Canton of Zurich arrived at a taxable capital gain of CHF 15,045,942.95 and a real estate capital gains tax of CHF 6,007,760. The Administrative Court of the Canton of Zurich reduced the taxable capital gain to CHF 15,031,040 and the real estate capital gains tax to CHF 6,001,800.
Considerations
The Federal Supreme Court partially upholds the appeal. It finds that a real estate dealer's lump-sum deduction of CHF 2,466,000 in favor of the Canton of Schwyz must be taken into account. In all other respects, the appeal is dismissed.
The Federal Supreme Court states that the tenant improvements of CHF 8,677,791.45 are not to be considered as acquisition costs, as they were not the subject of the purchase contract. However, the Canton of Zurich as the canton of situs must bear a share of the taxpayer's general…