What tax aspects do I need to consider when renting out my property?
March 6, 2023 | 50,00 EUR | answered by Dietrich Hohenadel
Dear tax advisor,
My name is Ralf Krausmüller and I am the owner of a property that I would like to rent out. I have some questions regarding the tax aspects that I need to consider.
In terms of the current situation: I plan to rent out my property to generate additional income. The property is located in Germany and I am also liable for taxes there. I have no previous experience with renting out properties and therefore I am unsure about the tax regulations that I need to consider.
The current state is as follows: The property is currently vacant and I plan to rent it out in the near future. I want to ensure that I comply with all tax regulations and avoid making any mistakes that could lead to unpleasant consequences.
My concerns are that I may overlook tax aspects and therefore run into problems with the tax office. I want to handle everything correctly and legally to avoid any legal issues.
Therefore, my question to you is: What tax aspects do I need to consider when renting out my property? Are there any specific regulations or deductions that I can take advantage of? How can I ensure that I correctly fill out my tax return and provide all relevant information?
I look forward to your response and thank you in advance for your help.
Sincerely,
Ralf Krausmüller
Dear Mr. Krausmüller,
Thank you for your inquiry regarding the tax aspects of renting out your property. It is understandable that you may feel unsure, as there are many regulations and requirements to consider when renting out properties. I will now explain in detail what you should pay attention to.
First and foremost, it is important to know that the income from renting out your property is generally considered rental and leasing income (§21 EStG). These are reported in your annual tax return and are subject to income tax. Income includes not only rental income, but also any incidental expenses, such as parking fees or income from renting out furniture.
On the other hand, various expenses can also be claimed for tax purposes. These include maintenance costs, management costs, property tax, building insurance, interest on loans used to finance the property, and depreciation on the building and furnishings. These costs reduce your taxable income and thus reduce your tax burden.
Furthermore, there are special tax regulations that you can take advantage of. For example, you can claim linear depreciation for buildings over a period of 50 years. You may also be able to depreciate the acquisition costs for the property through building depreciation. Additionally, you can take advantage of the so-called 10% depreciation for wear and tear (AfA) to claim the depreciation of the building for tax purposes.
To ensure that you provide all relevant information and fill out your tax return correctly, I recommend seeking the assistance of a tax advisor. A tax advisor can help you consider all tax aspects and assist you in optimizing your tax burden.
I hope that my explanations are helpful to you and I am happy to answer any further questions you may have.
Sincerely,
Dietrich Hohenadel
