House sale with partial renting
February 15, 2010 | 30,00 EUR | answered by Matthias Wander
Dear Sir or Madam,
Please answer the following matter... I built a single-family house with my girlfriend in 2005. After the separation in 2006, I tried to rent out the top floor from 2008, as I have been living in the house (160sqm) alone since then. A building permit was approved and advertisements were also placed. Unfortunately, there was no rental... I wanted to claim the tax losses from 2008 and 2009 in my tax return. Due to my new partner, I sold the property at the end of 2009 and the handover will take place in April 2010... Can I still claim the losses for 2008/2009 or do you see risks for me due to the sale such as capital gains tax (purchase price with development costs 200k / selling price 190k) / other risks for the buyer or me etc. The apartments are the same size and also sealed according to the building permit approval... The decision for 2008 is still pending from the tax office.
Thank you in advance. Yours sincerely.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation.
The mere intention to rent out a property is sufficient to be able to deduct negative rental income for tax purposes. Since there have been no actual rental income, the tax office will require proof of the intention to rent out. In this case, notifications of the planned rental are sufficient to be able to deduct the losses for tax purposes.
Please note that selling the "rented" part within 10 years of acquisition is considered a private sale, which is subject to tax if the profit is €600 or more.
The profit is calculated as follows:
proportional sales price
minus
- proportional selling costs
- proportional continued acquisition costs (acquisition costs minus depreciation taken into account in the rental)
In your case, since the property was sold at a loss of €10,000, it is unlikely that there will be any speculative profit, even considering the depreciation taken.
I hope this gives you an initial overview.
Best regards,
Wander
Tax consultant
