How can I claim the cost of roof renovation for a rental property as a tax deduction?
March 10, 2020 | 30,00 EUR | answered by Steuerberater Knut Christiansen
I bought an old farmhouse in 2009. However, I sold the house in 2019, about 6 months before the end of the ten-year period. The tax office is likely to calculate capital gains tax. The question is how I can reduce the profit. The property was rented out on the ground floor. I wanted to renovate the property and create at least four more rental apartments. Unfortunately, the bank did not approve the financing. The biggest cost was the renovation of the roof. The roof was still from 1904. I had the roof completely removed and rebuilt. The roof was in poor condition, leaking in many places. The roof renovation was a fundamental requirement for any further renovation work. My question is whether I can claim the cost of the roof renovation for tax purposes and if so, how? I am not clear on the difference between acquisition costs and production costs, etc.
Good day and thank you for using frag-einen.com!
In principle, you can claim the expenses for roof renovation if there are (subsequent) acquisition costs involved. This would definitely be the case if maintenance costs of more than 15% of the building substance have been incurred within 3 years of the acquisition of the property.
If the roof renovation is carried out after the expiration of 3 years, subsequent acquisition costs would be present if they have led to a significant improvement or usability of the property. Based on your description, I would assume that this has been the case. Therefore, I would treat the costs of the roof renovation as acquisition costs and deduct them from the sales proceeds. The costs need to be proven with invoices. However, a deduction would be excluded if you have already claimed the costs as operating expenses (maintenance) within the scope of rental and leasing income (proportionally).
I hope this answers your question, otherwise feel free to ask further questions at no cost.
I would like to point out that this forum cannot replace personal advice, but can only serve as an initial tax assessment. Missing or incomplete information can alter the legal outcome.
Kind regards
Knut Christiansen
Tax advisor
