How can tax losses from real estate investments be claimed?
December 2, 2022 | 50,00 EUR | answered by Otto Dornbusch
Dear Tax Advisor,
My name is Paula Beck and I have been involved in real estate investments for some time. Over the past few years, I have acquired several properties that I rent out. Unfortunately, unforeseen costs have accumulated in the past, leading to financial losses.
Now I am wondering how I can claim these tax losses from my real estate investments. I don't have much experience with the tax side of real estate investments and I am therefore unsure how to proceed.
I am concerned that at the end of the year I will be left with high losses and not know how to account for them tax-wise. Are there ways to claim the losses from my real estate investments for tax purposes? What steps do I need to take and what documents do I need for this?
I would greatly appreciate it if you could help me in this matter and show me possible solutions. It would be a great relief to know how to properly handle my tax losses from my real estate investments.
Thank you in advance for your assistance.
Sincerely,
Paula Beck
Dear Mrs. Beck,
Thank you for your inquiry regarding the tax treatment of losses in your real estate investments. It is important that you claim these losses for tax purposes in order to reduce your tax burden and obtain financial relief.
First and foremost, it is important to understand that losses from rental and leasing activities can be tax deductible. These losses can be offset against other income to reduce your tax liability. In order to claim the losses, you must report your income from rental and leasing activities in your income tax return.
It is important that you carefully document all expenses related to your rental properties. This includes, for example, ancillary rental costs, maintenance costs, management fees, interest on loans used to finance the properties, and depreciation on the properties. These costs can be claimed as deductible expenses and therefore reduce your taxable income.
To claim the losses for tax purposes, you must complete Annex V (Income from rental and leasing) in your income tax return. There you enter your income and expenses and can clearly indicate the losses. Please make sure that you have all the necessary receipts and documents for your expenses in case they need to be proven.
In addition to deductible expenses, special depreciation and increased deductions for certain renovation and modernization measures can also be claimed. These can also help reduce your tax burden.
It is advisable to seek support from an experienced tax advisor in tax matters to ensure that all tax options are maximized and no mistakes are made in the tax return.
I hope this information is helpful and that you are able to correctly handle the tax losses in your real estate investments. If you have any further questions, please do not hesitate to contact me.
Best regards,
Otto Dornbusch
