Multi-family house as a community of co-owners with both personal use and rental purposes.
October 24, 2016 | 35,00 EUR | answered by Oliver Burchardt
We have inherited a multi-family house with four apartments with four siblings, and now each of us is listed in the land register with a 25% share. (no declaration of division, so not condominiums, but a multi-family house) By definition and law, we are therefore a so-called community of joint owners, which I am personally familiar with as I am also involved in another property with a fractional share. For the annual tax return, it is common practice to fill out Annex "V", in which advertising costs and rental income are offset against each other to determine the total profit, and then this is to be divided among the co-owners' shares in the "separate and uniform determination of income" or Annex "FB". So far so good. In our case, two of us will move into their 25% share of the house (the house conveniently consists of 4 equally sized apartments), while the other two will rent out their apartments, so that two owners will have rental income while the other two will exclusively use their apartments. What is the correct formal way to reflect this in the tax return?
Dear inquirer,
Thank you for your inquiry, which I would be happy to answer as part of an initial consultation.
Due to the nature of being a joint ownership community, you must also have a separate and uniform determination made for the inherited house. The fact that 2 heirs are occupying apartments is irrelevant here. As you correctly stated, the house belongs to all heirs at 25% each. If two heirs now move into apartments, this does not change the tax and corporate legal procedures.
In my opinion, rental income still belongs unchanged to all heirs at a quarter each and accordingly should be taxed for all.
I consider the tax issue to be the lesser problem. You should quickly pursue a division of the estate with your co-heirs to legally secure the use of the apartments by some of the heirs. Alternatively, you could also consider agreeing on different distribution keys for the rental income within the community.
However, you should consult a lawyer for this, as I am not authorized to provide advice on this matter.
Best regards,
Oliver Burchardt
Tax consultant
