How can I save taxes as a landlord of real estate?
October 21, 2023 | 55,00 EUR | answered by Ulrike Voss
Dear Tax Attorney,
My name is Fred Schottmann and I am a landlord of several properties. In recent years, I have paid high taxes on my rental income and I am wondering if there are ways to save on taxes.
The current situation is as follows: I generate monthly income from renting out my properties, which I report as rental and leasing income in my tax return. In addition to rental income, I also deduct expenses such as maintenance costs, management fees, or loan interest. However, high tax payments remain, significantly reducing my profits.
I am concerned that due to the high tax burden, I do not generate enough profit and my real estate investments are not profitable. Therefore, I would like to know what options are available to save taxes as a landlord.
What tax planning options or optimizations could be relevant to my situation? Are there specific depreciation models or tax allowances that I can use to reduce my tax burden? How can I manage my rental income in a tax-efficient manner to increase my profit?
I would greatly appreciate your expertise and advice on how to improve my tax situation as a landlord and make my real estate investments more profitable.
Thank you in advance.
Sincerely,
Fred Schottmann
Dear Mr. Schottmann,
Thank you for your inquiry regarding tax optimization as a landlord of real estate. It is understandable that you are concerned about the high tax burden on your rental income and are looking for ways to reduce your tax liability and make your real estate investments more profitable.
There are indeed various tax planning opportunities and optimizations that could be relevant to your situation. First and foremost, it is important that you carefully document all expenses related to the rental of your properties and claim them in your tax return. This includes not only the maintenance and management costs you mentioned, but also depreciation on the buildings as well as interest and repayments on loans.
One way to reduce your tax burden is to use tax depreciation models such as straight-line depreciation or declining balance depreciation. Through depreciation, you can deduct the purchase or production costs of your properties over a certain period of time for tax purposes and thus reduce your profits.
Furthermore, there are certain tax allowances that you can use as a landlord to reduce your tax burden. These include, for example, the basic tax-free allowance or the savings lump sum. It is worthwhile to take these allowances into account in your tax return to reduce your tax burden.
Additionally, you may also consider tax-optimized administrative structures for your rental income, such as establishing a rental GmbH or using tax-optimized contract structures.
It is advisable to seek advice from an experienced tax advisor or tax lawyer to identify and implement the optimal tax planning opportunities for you. I am happy to provide you with individual advice and support you in improving your tax situation and making your real estate investments more profitable.
Thank you for your trust and your inquiry.
Best regards,
Ulrike Voss
Tax Lawyer
