Ground rent
September 3, 2009 | 15,00 EUR | answered by Irmingard Huber-Stempfel
Is it possible to deduct construction loan interest for tax purposes, and if so, to what percentage?
Dear inquirer,
Paid ground rent is a fee for the use of the property, comparable to a rental or lease agreement. If taxable income is generated with the property, the ground rent is tax deductible. This can be considered as operating expenses in the context of rental and leasing income if the property is rented out to a third party. It can be classified as business expenses in the context of a commercial enterprise / self-employment if income is generated with the property. It can be considered as interest on debt in the context of a home office, provided that the home office is recognized as tax-deductible expenses according to the latest legislation. In summary, it depends on the taxable income generated with the property. Within this income, the ground rent is to be deducted as operating expenses or business expenses.
The amount - percentage depends on the use for the type of income. For example, if the property is rented out 100%, then 100% should be applied. For example, in the case of a two-family house where unit 1 is owner-occupied and unit 2 is rented out to a third party, and the units are of identical size, 50% of the ground rent should be applied. The allocation is based on the living area.
This advice is provided as part of the initial consultation based on the presented facts. If you wish to clarify your question further or have any further inquiries, please use the follow-up function.
Best regards,
I. Huber-Stempfel
