Can I deduct the costs of a house renovation for tax purposes?
April 25, 2023 | 50,00 EUR | answered by Mia Pilz
Dear tax consultant,
My name is Hilde Schlosser and I am considering renovating my house. This will involve significant costs, and I am wondering if I can deduct them from my taxes.
The current situation is as follows: My house is already several years old and in need of modernization and renovation. I plan to renovate the bathroom, modernize the kitchen, and make some changes to create more space. The estimated costs amount to a five-figure sum, which is a considerable financial burden for me as a private individual.
My concern now is that I may not be able to deduct the costs of the house renovation from my taxes and will have to pay even more money out of my own pocket. I have done some research online and found some information on the tax deductibility of renovation costs, but I am unsure if this also applies to extensive remodeling.
So my question to you is: Can I deduct the costs of the house renovation from my taxes, and if so, to what extent? Are there any specific requirements or conditions that I need to consider in order to benefit from tax advantages? I would greatly appreciate your expert advice to better assess my financial situation in relation to the house renovation.
Thank you in advance for your assistance.
Sincerely,
Hilde Schlosser
Dear Mrs. Schlosser,
Thank you for your inquiry regarding the tax deductibility of renovation and remodeling costs for your house. As a tax advisor specializing in real estate taxation, I am pleased to assist you with your concerns.
In general, renovation and modernization costs for owner-occupied residential property cannot be deducted for tax purposes, as these are considered private expenses. However, the situation is different for rental properties or owner-occupied residential properties that are partially rented out. In these cases, the costs for renovation and remodeling can be claimed as tax deductible.
The same rules generally apply for the tax deductibility of remodeling costs as for renovation costs. Deductible costs may include expenses for craftsman services, material costs, planning costs, and construction overhead. It is important to note that only the labor costs for craftsman services are deductible for tax purposes, not the pure material costs.
To be able to claim the costs of the house remodeling as tax deductible, you must be able to prove that the measures serve the preservation, modernization, or improvement of the property. Additionally, you should carefully keep all receipts and invoices to prove, in case of a tax audit, that the costs are indeed deductible.
It is advisable to consult with a tax advisor beforehand to maximize all tax opportunities. Together, we can assess to what extent the costs for your house remodeling are tax deductible and what requirements you need to meet in order to benefit from tax advantages.
I hope that this information has been helpful to you and I am available for any further questions. Thank you for your trust and inquiry.
Best regards,
Mia Pilz
