Depreciation of a rented property (single-family home)
January 6, 2010 | 15,00 EUR | answered by Oliver Burchardt
I built a single-family house myself in 1999 and lived in it with my family until 2008. Due to job reasons, I moved with my family and have been renting out the single-family house since 2009. How can I include the construction costs for depreciation in my income tax return (I no longer have all the invoices from back then)?
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Adding, changing, or omitting information can affect the assessment.
In your case, depreciation for residential properties is generally calculated at 2% per year according to § 7 para. 4 no. 2 EStG. Possibly, a declining balance depreciation according to § 7 para. 5 EStG could also be considered. I cannot assess this based on the information provided. Which depreciation method is more advantageous must also be carefully reviewed for tax purposes.
The basis for assessment is the production costs incurred in 1999. These production costs must be credibly demonstrated to the tax authorities.
If you no longer have all the invoices, I would suggest contacting the contracted construction companies first. The invoices may still be available there. However, the statutory retention periods are likely to have expired in most cases. If you cannot provide all the invoices, you should make the best possible estimate and determine the depreciation based on that. However, there is a risk that the tax office will reject your estimate and only recognize the verifiable costs.
In this case, you should talk to your tax official, as it cannot be expected that all invoices will be kept for over 10 years. I believe that you can also reach a reasonable estimate through discussion with the tax office. There is no guarantee, however, as you may not be able to meet the burden of proof imposed on you under §§ 90 ff. AO due to the lack of invoices.
I hope I have been able to assist you.
Sincerely,
Oliver Burchardt
Certified Public Accountant
Tax Advisor
