Are there tax differences between new buildings and existing properties?
May 29, 2022 | 50,00 EUR | answered by Mia Pilz
Dear Mr./Ms. Tax Advisor,
My name is Gertrud Otten and I own a rented property. In the past, I have extensively researched the topic of property taxation and have found that there may be tax differences between new buildings and existing properties.
My concern is to find out if there are actually differences in the taxation of new buildings compared to existing properties and what these differences are. I would like to know if there are tax advantages or disadvantages depending on whether it is a newly built property or an existing one.
Regarding the current situation: My rented property has been in my possession for several years and I receive regular income from rental payments. I want to ensure that I am optimally positioned for tax purposes and take measures if necessary to optimize my tax burden.
I am worried that I might overlook tax advantages with new buildings and therefore give away money. Therefore, it would be of great interest to me to find out if it would be worthwhile to invest in new buildings in the future or if my existing property is more tax-efficient.
My specific question to you is: Are there tax differences between new buildings and existing properties and if so, what are they? What options do I have to optimize my tax burden and which investment decisions would be most beneficial from a tax perspective?
Thank you in advance for your help and advice.
Sincerely,
Gertrud Otten
Dear Mrs. Otten,
Thank you for your inquiry regarding real estate taxation. As a tax advisor specializing in this area, I am happy to assist you and answer your questions in detail.
Generally, there are indeed tax differences between new buildings and existing properties, which can affect the taxation of rental income and potential tax advantages or disadvantages. New buildings are properties that have been recently constructed or are still under construction, while existing properties have been around for some time and may already be rented out.
Regarding the taxation of rental income, there are no fundamental differences between new buildings and existing properties. Rental income from both types of properties is subject to income tax and must be declared in the annual tax return. It does not matter whether it is a newly constructed property or an already existing one.
However, there are tax advantages that can arise with new buildings. For example, certain depreciation methods such as straight-line depreciation or declining balance depreciation can be claimed for new buildings, leading to a tax relief. Additionally, investments in energy-efficient renovations or listed buildings can be financially supported.
It is important to note that the tax benefits of new buildings can vary depending on individual circumstances and planned investments. It is therefore advisable to seek individual tax advice to fully capitalize on tax opportunities and take measures for tax optimization if necessary.
In your specific case, since you already own a rented out existing property, it may be worthwhile to examine the tax advantages of new buildings and consider whether investing in new buildings would be more tax-efficient. A thorough analysis of your current situation and planned investments can determine which investment decisions are most financially beneficial.
I recommend scheduling a personal consultation to discuss your individual tax situation and develop possible tax optimizations together.
I hope that this information has been helpful to you and I am available for any further questions.
Best regards,
Mia Pilz, Tax Advisor
