Deductibility of ancillary purchase costs in property acquisition.
March 29, 2013 | 40,00 EUR | answered by StB Patrick Färber
Hello,
my questions concern the acquisition of a 3-family house. Currently, one apartment is being used by the seller and 2 apartments are rented out, starting from July we will take over the seller's apartment, the other two will remain rented out. The purchase contract was already signed in November 2012, the purchase price payment will only be made in April 2013. Therefore, some of the purchase price ancillary costs have occurred in 2012 (brokerage and notary) and some in 2013 (property transfer tax and registration of land charge). From the purchase price payment in April, the first rental income will also start flowing, before that there are no rental and leasing income.
My questions are:
In which "tax return" year can the purchase price ancillary costs be claimed for tax purposes?
Can parts of the purchase price ancillary costs already be depreciated in 2012?
Will all the listed purchase price ancillary costs be used for depreciation or can some costs be immediately deducted?
Property purchase contract: 27.11.2012
Notary invoice: 09.12.2012
Brokerage invoice: 09.12.2012
Property transfer tax: 28.01.2013
Land charge invoice: 10.02.2013
Purchase price payment: 30.04.2013
Best regards,
M. F.
Good evening dear asker,
Taking into account the local rules and your input, I would like to answer the question as follows, although the information is not complete:
Let me start with question 2:
All costs listed by you belong to the ancillary acquisition costs, meaning they are not immediately deductible, but they form the basis for depreciation. Please remember that the portion for land must be excluded, as it is not depreciable (= either purchase price allocation or portions for building/land explicitly stated in the contract).
Question 1:
The "depreciation" of ancillary costs mentioned by you are indeed advertising costs in the form of depreciation, which you can claim because you will have rental income and I assume that tenants will transfer rent to your account starting from May 2013. However, you can only claim depreciation for tax purposes from the point when you actually rent out the property. In this case, we would need to know when the "transfer of possession, risk, benefits, and burdens" according to the contract is. From that point onwards, you have "acquired". I would assume this is on 30.4.2013 (purchase price payment). Therefore, it is correct when you say that you will only have "VuV income from April onwards", more likely from May.
If the above-mentioned point is EARLIER, then you would already generate VuV income from that point onwards (assuming tenants stay despite change of ownership), provided that the rent is already paid to you. However, this is unlikely.
Therefore, based on your description, I conclude that the "acquisition" is as of 30.4. From this date onwards, you will generate income from VuV. Depreciation is therefore based on the total costs from THIS POINT onwards. I believe that previous depreciation due to ancillary costs is not applicable.
If the situation is different than I assumed, please let me know. Otherwise, a brief summary:
1) All costs are acquisition costs, not immediately deductible advertising costs
2) Depreciation starts from 30.4.2013 (=tax year 2013) based on purchase price and ancillary costs.
I hope this helps!
Wishing you a happy Easter,
Patrick Färber
Tax Advisor
patrickfaerber@arcor.de
