Single-family house after separation - Which tax design makes the most sense?
The single-family house was purchased in February 2017 and occupied by both partners. According to the land register, both partners each own 50% of the single-family house.
Due to a separation, one of the partners is now supposed to live alone in the house. Selling the house is currently not an option.
Our idea was the following:
Both partners continue to pay 50% of the costs. The partner who moves out then rents out the 50% share to the partner who remains in the house.
I would expect that both the income and expenses can be considered tax-deductible, including half of the acquisition costs. Of course, we would ensure everything is legally documented and also keep an eye on the fair market rent.
Does this arrangement make sense to you and is there anything else to consider? Or is there a different arrangement that might be more tax-efficient?
Additionally, certain special features (fitted kitchen, awning, various designer furniture, etc.) should also be rented out. What could be a tax-efficient way to handle this? Most of these items were paid for by the partner who is moving out.
Are there any considerations to keep in mind regarding a future sale (e.g. to the partner who remains in the property)? Would taxes be applicable in this case?
