What tax aspects do I need to consider when purchasing a property?
April 5, 2023 | 50,00 EUR | answered by Ulrike Voss
Dear tax lawyer,
My name is Johann Fischer and I am about to acquire a property. Since this is my first time dealing with this, I am unsure about the tax aspects I need to consider. I want to make sure that I do not make any mistakes and end up having to pay unexpected taxes.
Currently, I am in the situation where I have found a suitable property and am about to sign the purchase contract. My goal is to use the property as a long-term investment and possibly generate rental income.
My concerns mainly lie in not knowing exactly how the acquisition of the property will affect me tax-wise. What taxes do I have to pay when buying a property? Are there ways to save on taxes or benefit from tax advantages?
I would greatly appreciate it if you could provide me with an overview of the tax aspects of acquiring a property and suggest possible solutions. I want to make sure that I fulfill all tax obligations properly and do not overlook any tax pitfalls.
Thank you in advance for your support.
Sincerely,
Johann Fischer
Dear Mr. Fischer,
Thank you for your inquiry regarding the tax aspects of purchasing a property. It is understandable that as a first-time buyer, you may feel uncertain and want to ensure that everything is done correctly. Indeed, buying a property is associated with various tax aspects that need to be considered.
When purchasing a property, real estate transfer taxes are generally due. The amount of this tax varies depending on the federal state and is usually between 3.5% and 6.5% of the purchase price. In addition, notary and land registry costs must be taken into account, which are also tax-relevant. However, these costs are not directly tax deductible, but simply increase the acquisition cost of the property.
If you intend to rent out the property, you can deduct the associated costs for tax purposes. These costs include maintenance and management fees, depreciation, and financing costs. These expenses reduce your taxable rental income and can therefore reduce your tax burden.
Furthermore, you can benefit from tax depreciation options. For example, you can deduct the purchase price of the property over a period of 50 years through so-called straight-line depreciation. Additionally, you can also benefit from special depreciation allowances, such as monument depreciation, if the property is listed as a monument.
To save on taxes, it is advisable to consult with a tax advisor or specialist in tax law early on. An expert can provide you with individual tax tips and help you avoid tax pitfalls. Additionally, they can assist you in fulfilling your tax obligations properly and make the most of potential tax benefits.
In conclusion, it is important to address the tax aspects of property acquisition early on to avoid unexpected tax payments. I am happy to answer any further questions you may have and support you in your endeavor.
Best regards,
Ulrike Voss, Tax Lawyer
