production costs and maintenance expenses
April 8, 2015 | 30,00 EUR | answered by Anton Pernitschka
Good day,
we intend to purchase an apartment from a property developer (which has been completely renovated beforehand) in order to rent it out afterwards.
The purchase price does not include three special requests, which we will pay for ourselves and then also want to claim tax deductions for.
1. For an additional fee, a modern bus system can be installed after the notarization to control the electrical system.
Do these expenses count towards (subsequent) production costs? Will this additional fee then be added to the building depreciation and claimed? Or does the bus system installed afterwards count as maintenance costs?
2. The purchase price does not include a glass shower enclosure in the bathroom.
If we determine that a shower enclosure is necessary and have one installed very soon after, are the costs immediately deductible as maintenance expenses?
Or would the seller have to install a shower curtain beforehand, which we would then replace with a glass shower enclosure afterwards to justify a maintenance expense?
3. In one room, we intend to have a sliding wall installed as a room divider at our own expense. How can the costs for this be claimed for tax purposes?
Thank you for your response!
Dear inquirer,
In the context of an initial consultation and your fee commitment, while complying with the regulations of this forum, I would like to answer your questions.
Expenses for construction measures carried out after the acquisition of a building are considered as "acquisition-related expenses" for tax purposes if they exceed 15% of the acquisition costs of the building within the first 3 years.
Typical maintenance expenses that usually occur annually are not taken into account. Even expenses for expansion as defined in § 255 para. 2 sentence 1 of the German Commercial Code (HGB) are always considered as production costs, so they do not count towards the 15% limit. On the other hand, expenses for eliminating dysfunctionality and raising the building standard should be included in the examination of the 15% limit.
In the present case, these seem not to be typical maintenance expenses, so the listed planned construction measures would be included in the 15% rule. If these conditions are met, these construction measures are considered as acquisition/ production costs of the building and should be taken into account as advertising costs within the building depreciation.
The response was provided based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Best regards,
Anton Pernitschka
Tax consultant
