Deductible costs for vacation rental properties
February 2, 2016 | 35,00 EUR | answered by Peter Lipp
Dear Sir or Madam,
In 2015, I purchased a plot of land in order to build a holiday home in 2016, which will be used solely for rental purposes. In 2015, I incurred expenses such as the purchase of the land, land transfer tax, fees for registrations, notary fees, travel expenses, postage, loan procurement costs, interest, and the construction of the foundation.
In 2016, there will be additional costs for the construction of the house, hiring of craftsmen, exterior installations, travel expenses, interest, etc. When can I deduct these costs from taxes? Is it in the year of the first rental, or can I already do so with the 2015 tax return? I am looking to become self-employed. Should I start this with the beginning of the rental, or should I do so now?
Dear questioner,
When it comes to costs, it must be distinguished whether they are directly deductible or serve the acquisition of the property. These costs are then to be spread over the period of use, usually 50 years.
The immediately deductible costs include:
Travel expenses, postage, credit procurement costs, interest.
The costs that must be capitalized include: Land purchase, real estate transfer tax, registration fees, notary fees, foundation plate, and other construction costs.
The exterior facilities are to be assessed separately and depreciated over 10 years.
The advertising costs determined in this way can already be claimed in the year of purchase, while the depreciation of the property can only be claimed after its completion. The precondition is the seriousness of the intention to rent out.
If the property is to be operated commercially, the commencement of the activity must be reported to the tax office.
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