Do I have to pay taxes on income from renting out my agricultural property?
May 8, 2024 | 50,00 EUR | answered by Mia Pilz
Dear tax advisor,
My name is Xenia Weise and I own an agricultural property that I rent out. This year, I have generated income from leasing this property for the first time and I am now wondering if I need to pay taxes on this income.
My situation is as follows: I inherited the property and have been renting it out to a farmer for agricultural purposes for several months. The rental income is an important source of revenue for me, as I use it to repay loans that I took out for renovation work on the property.
I am concerned that I may have to pay taxes on the rental income and I am not sure how to calculate them exactly. I do not want to have any issues with the tax authorities and therefore want to make sure that I fulfill all my tax obligations.
My question to you as a tax advisor is: Do I have to pay taxes on income from leasing out my agricultural property? If yes, how exactly are they calculated and what options do I have to save on taxes?
Thank you in advance for your help and support.
Kind regards,
Xenia Weise
Dear Mrs. Weise,
Thank you for your inquiry regarding the taxation of income from the leasing of your agricultural property. I understand that you are concerned about your tax obligations and want to ensure that you declare everything correctly. I am happy to explain to you the relevant tax aspects related to the rental of your property.
In principle, you must declare and pay taxes on the income from leasing your agricultural property as income from renting and leasing. It does not matter whether you inherited the property or acquired it yourself. The lease income is considered income and is subject to income tax.
The calculation of taxes on lease income is based on the profit earned. The profit is determined by subtracting the rental income from deductible expenses. Deductible expenses include, for example, interest on loans taken out for the renovation of the property, maintenance costs, management fees, property tax, insurance premiums, and depreciation. So, you can deduct all expenses related to the rental from your taxable income.
To save on taxes, it is important to document all relevant expenses and report them to the tax authorities. It may also be beneficial to seek professional tax advice in order to fully utilize all opportunities for tax optimization.
Additionally, there are certain tax benefits for agricultural businesses that can positively impact your tax burden. Therefore, it may be advisable to educate yourself on all tax advantages for agricultural rentals.
Overall, it is important that you carefully document your income and expenses and provide all relevant information to the tax authorities in a transparent manner to avoid tax issues.
I hope that this information has been helpful to you. If you have any further questions or require more detailed advice, I am at your disposal.
Kind regards,
Mia Pilz
Tax Advisor
