Moving expenses and capital gains
December 15, 2010 | 30,00 EUR | answered by Michael Herrmann
We have 2 sub-questions related to our professional relocation in 2009:
1. Approach of credit interest as moving expenses
The change of employer and place of residence took place on June 30, 2009. Our efforts to sell or rent out our detached house were not successful at that time. However, it can be proven that we pursued both options. The sale then took place in September. In our income tax return, we wanted to claim the interest for the months of July and August as deductible expenses (totaling almost 4,000 euros) (referring to comparability with notice period for rented apartment). This was not accepted. Is this correct or should we continue to pursue our argument?
2. Capital gains
Substantial prepayment penalties would have had to be paid in connection with the sale of the house. Therefore, we "left" the money at the bank until the purchase of a new property in early 2010. In the meantime (September to December 2009), we paid interest on the loan on one hand, and received interest on deposits on the other hand. The deposit interest rates were naturally lower than the loan interest rates. However, the savings allowance was greatly exceeded. Our approach in the income tax return was to deduct the interest on the loan up to the amount of the capital gains tax paid, justified by a logical connection of the amount and duration identical borrowing and investment. This was not accepted. Is this correct or should we continue to pursue our argument?
Thank you in advance. We are available for further questions.
Dear inquirer,
First of all, thank you very much for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response will be in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
1) The principle applies:
The deductibility of moving expenses is governed by the Federal Relocation Expenses Act (R 9.9 para. 2 sentence 1 Income Tax Guidelines 2008). The deductible moving costs are regulated in sections 6 to 10 of the Federal Relocation Expenses Act (BUKG). The Federal Relocation Expenses Act governs the claims of federal officials against the employer.
In the case of moves from one's own home, the official is reimbursed for the costs incurred after vacating and leaving the property vacant. Therefore, a deduction for business expenses is also possible:
If the primary residence is to be sold, you can deduct the actual costs such as mortgage interest, property tax, electricity costs, water and sewage costs, chimney sweep fees, and home insurance. These expenses have been recognized for a period of 10 months. Not deductible are depreciation and travel expenses related to the sale (FG Rheinland-Pfalz of 16.4.1996, EFG 1996 p. 975).
The FG Cologne does not want to recognize double rent payments as deductible business expenses beyond one year if the primary residence is still not sold. "It is not justified to impose the risk of non-saleability of assets on the community" (FG Cologne of 20.11.2008, EFG 2009 p. 460).
Therefore, you should continue to insist on these expenses and, if necessary, expand them according to the above catalog.
2) The interest concerns private loans or private credits. With the introduction of the flat tax in 2009, the deduction of business expenses for capital income has been abolished as part of the simplification of income determination and reduction of tax rates on capital assets. Therefore, interest expenses incurred to obtain interest income can no longer be offset. Therefore, your argument is not relevant.
I hope that these explanations have provided you with a sufficient overview of the situation in the context of your inquiry and this initial consultation, and remain
Sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
