Can I avoid double taxation in real estate investments?
December 9, 2022 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
My name is Tobias Stricker and I am currently dealing with the topic of real estate investments. I recently acquired a property abroad and am now concerned that I will be disadvantaged by double taxation when it comes to the taxation of my investment.
Regarding the current situation: I acquired the property abroad to rent it out and generate long-term profits. Of course, I want to be optimally positioned from a tax perspective and avoid having to pay taxes in both Germany and abroad.
My concerns lie in the fact that I do not know exactly how to avoid double taxation in real estate investments. I fear that I may end up making less profit than planned if I do not take the right tax measures.
Therefore, my question to you: Are there ways to avoid double taxation in real estate investments? What tax strategies can I use to optimize my investment and minimize my tax burden?
I would be very grateful if you could provide me with specific advice and recommendations on how to best proceed in this situation.
Thank you in advance for your support.
Sincerely,
Tobias Stricker
Dear Mr. Stricker,
Thank you for your inquiry regarding double taxation in real estate investments. It is understandable that you are concerned about minimizing your tax burden and optimizing your investment. Indeed, there are various ways to avoid or at least minimize double taxation in real estate investments.
Firstly, it is important to know that double taxation can occur when both the country where the property is located and your home country (in your case Germany) have the right to tax your rental income. To avoid this, there are various tax strategies you can apply.
One option is to utilize a double taxation agreement (DTA) between Germany and the country where your property is located. A DTA specifies which country has the right to tax your rental income, which can help avoid double taxation.
Furthermore, you should check if there are exemptions or credit possibilities in the country where your property is located that can help reduce your tax burden. It may also be beneficial to seek advice from a specialized local tax advisor to fully explore all tax options.
Another approach could be to use tax optimization strategies, such as depreciation or creating reserves, to minimize your tax burden. It is important to carefully consider all tax regulations and rules in both countries to avoid potential pitfalls.
Overall, it is advisable to seek individual and comprehensive advice to optimize your tax situation and avoid double taxation. As a tax consultant with expertise in double taxation in real estate investments, I am available to answer your questions and provide you with specific recommendations.
I hope this information is helpful and I am available for further questions.
Best regards,
Guido Hoffmann
