Double household management - exchange of primary/secondary residence
December 28, 2009 | 15,00 EUR | answered by Oliver Burchardt
Dear Sir or Madam,
My wife and I have been maintaining a recognized second household since 2008 for tax purposes. I live in Eisenach (80 sqm apartment) for work reasons, while my wife lives in Hannover (40 sqm apartment). Our current main residence is in Eisenach (which is also our registered primary residence).
Over the past 1.5 years, we have increasingly realized that Hannover has become our primary home, and we now spend most weekends there. As a result, we are planning to purchase a property in Hannover in the near future. Additionally, in 2010, we intend to officially change our primary residence to Hannover, while I will move to a smaller apartment in Eisenach (around 40 sqm) as a secondary residence.
In summary, our plan for 2010 involves switching our main residence from Eisenach to Hannover, as well as switching our primary and secondary residences.
What income tax considerations should we keep in mind in this scenario? Are there any pitfalls to be aware of when making such a change, or will this be easily recognized by the tax authorities?
Thank you in advance.
Sincerely,
Steffen Nordmann
Dear Mr. Nordmann,
Thank you for your inquiry, which I would like to answer as part of an initial consultation in the context of your situation.
Please note that the tax assessment is based on the descriptions of the circumstances. The addition, omission, or alteration of information can affect the tax assessment.
From a tax perspective, the issue that only concerns you is that by relocating your residence from your workplace to another primary residence, you are establishing a new double household management. Your wife is giving up the double household management she has practiced so far.
In the event of relocating the primary residence, there has been a positive development for you this year. The Federal Fiscal Court (BFH) has abandoned its previous jurisprudence that relocating from a tax perspective does not establish a double household management, BFH v. 5 March 2009, Ref. VI R 58/06.
Therefore, the normal rules apply for establishing a double household management. If your tax office does not recognize the relocation, please appeal against this decision with reference to the aforementioned judgment.
From my perspective, the relocation should be easily recognized if you adhere to the guidelines that your wife already follows in considering her double household management.
I hope that my response has been helpful to you.
Best regards,
Oliver Burchardt
Certified Public Accountant
Tax Consultant
