Facts
In this case, the tax treatment of the realized capital gain on real estate in a deferral chain was at issue. Spouses A.C. and B.C. had initially acquired a condominium unit as their marital home. They later sold this profitably and instead acquired a property on which they built a multi-family house with five residential units. They retained two of these units and five parking spaces for their own use. In December 2011, the spouses transferred these replacement properties to their joint daughter, while reserving the lifelong usufruct for themselves.
The municipality then revoked the previously granted tax deferral and demanded the capital gains tax. The spouses filed a complaint against this with the Federal Supreme Court.
Considerations
The Federal Supreme Court ruled that the federal legal system of tax deferral does not provide for a factual link whereby the person selling the real estate must again acquire and personally occupy real estate in order to create an uninterrupted deferral chain. Nor is there a minimum holding period for the replacement property.
The transfer of the replacement properties to the daughter with reservation of usufruct constitutes a privileged case giving rise to…