Transfer tax on partially rented multi-family house: Tax exemption for owner-occupied residential property denied

Facts

Parties and procedural history:

The appellant ([A.] ) acquired a property in [U.] /SO consisting of a residential building with two apartments as sole owner by purchase agreement dated 14 January 2019. In the purchase agreement, he stated that it was a single-family house, although the property was classified as a multi-family house with two apartments according to the valuation report of the Solothurn Building Insurance dated 17 December 2015. The appellant filed an application for a tax exemption for permanently and exclusively owner-occupied residential property, which was rejected by the Cantonal Tax Office of Solothurn with an assessment order dated 3 November 2021. The office justified the rejection on the grounds that the tax exemption was not permissible for a multi-family house that was partially rented out. It levied a transfer tax of CHF 51,700.-, based on a market value of CHF 2,350,000.- for the entire property.

After an unsuccessful appeal, the appellant appealed to the Cantonal Tax Court of Solothurn, which dismissed the appeal with a judgment dated 21 November 2022. The tax court based its decision on the finding that the appellant had rented out one of the two apartments during the tax periods 2020 and 2021 at a monthly rent of CHF 1,530.- (CHF 18,960.- per year). The appellant claimed that the apartment was used by his minor daughters as a family home, but was unable to provide any evidence for this. On 27 January 2023, he filed an appeal against the tax court's judgment with the Federal Supreme Court, requesting that the judgment be set aside, a new assessment be carried out, and the transfer tax be levied only on the rented part of the property.

Considerations

Admissibility of the appeal:

The Federal Supreme Court first examined the admissibility of the appeal in public-law matters. It found that the requirements of Art. 82 lit. a, Art. 83 e contrario, Art. 86 para. 1 lit. d and para. 2 and Art. 89 para. 1 and Art. 100 para. 1 FSCA were met. The appeal was admissible since the appellant had precisely presented and substantiated the alleged violations of law. With regard to the violation of fundamental rights, the qualified duty to raise objections under Art. 106 para. 2 FSCA was fulfilled. The Federal Supreme Court examined the application of harmonised cantonal tax law with full cognition, while non-harmonised, autonomous cantonal law was reviewed only for arbitrariness (cf. BGE 143 II 459 para. 2.1; 134 II 207 para. 2).

Characterisation of the transfer tax in the Canton of Solothurn:

The transfer tax of the Canton of Solothurn was to be qualified as an indirect tax that was not subject to the harmonisation requirement of Art. 129 Cst. (Art. 129 para. 1 Cst.; Art. 1 and 2 DTHA). According to § 205 para. 1 STC/SO, the tax object was any transfer of real estate, with the concept of transfer being broadly defined and not limited to civil-law transfers of ownership but also including economic transfers (§ 206 para. 1 STC/SO). The tax object was the transfer of economic control over a property, whereby essential parts of the owner's powers had to be transferred. The tax exemption for permanently and exclusively owner-occupied residential property under § 207 para. 1 lit. g STC/SO required that the property be exclusively and permanently occupied by the owner himself. According to § 63bis para. 3 Implementing Regulation STC/SO, the tax exemption was excluded if the acquirer only partially or temporarily occupied the property himself, in particular if the self-use was less than one year.

Application to the specific case:

The Cantonal Tax Court of Solothurn had correctly found that the appellant had rented out part of the property. The lower court based its decision on the appellant's tax returns for the years 2020 and 2021, in which he had declared a monthly rent of CHF 1,530.- for one of the two apartments. Although the appellant had claimed that the apartment was used by his minor daughters as a family home, he had not provided any evidence for this. The factual findings of the lower court were binding on the Federal Supreme Court, as the appellant had not shown that they were obviously incorrect, incomplete or had been established in violation of essential procedural rights (Art. 105 para. 1 and 2 FSCA).

Legal assessment of the tax exemption:

The appellant was not entitled to the tax exemption…