Private income from rental and leasing operations
January 26, 2011 | 50,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello,
I bought a second-hand apartment (2 rooms) for rental purposes in 2009. The purchase price was 65,000 EUR in a residential complex with 18 units (Lindau Bodensee). The apartment was renovated before the tenant moved in (sanding the floor, painting, new sanitary facilities, and a gas individual boiler). Within the first 3 years after acquisition, this is accepted as maintenance expenses up to 15% of the acquisition costs. Now I am wondering how to calculate the value of the land and property from the purchase price and from which amount the 15% is calculated. I am aware that the value of the land and property does not count towards the calculation of the 15%, but what about the ancillary acquisition costs? The property transfer tax was only levied in 2010, can I also include this in the ancillary acquisition costs for tax purposes in 2010?
Best regards
Dear client,
Thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your commitment within a first consultation as follows:
The 15% limit is calculated based on the building acquisition costs, meaning the land component must be subtracted from the 65,000 euros. Only the net invoice amount for the construction work, which includes the expenses WITHOUT value-added tax, is considered. Normal cosmetic repairs are NOT included in the 15% limit, as they are always immediately deductible advertising costs. Cosmetic repairs include expenses such as wallpapering, painting walls and ceilings, or painting windows and doors.
The ancillary acquisition costs, to the extent that they relate to the building part, are considered acquisition costs that must be included in the 15% calculation.
The division into building/land usually takes place according to the ratio of the market values of the land and building (BFH/NV 2001,514). This can also be done through a reasonable estimate. You can find more details in the purchase agreement. For example, if the purchase agreement does not specify otherwise, you could estimate the land component at 20%.
Example:
Acquisition costs: 65,000
Ancillary acquisition costs: 5,000
Total acquisition costs: 70,000
Land component at 20%: 14,000
Building acquisition costs: 56,000
15% limit: 8,400
Incurred renovation costs
Invoice amounts without VAT: 6,000
Cosmetic repairs: 4,000
You can deduct 10,000 euros as advertising costs, as cosmetic repairs do not count towards the 15% limit.
Best regards,
Ulrich Stiller
Tax advisor/Diploma in Business Administration
