Ask a tax advisor on the topic of Real estate taxation

Tax benefits in the case of a real estate partnership

May 10, 2015 | 30,00 EUR | answered by Anton Pernitschka

Dear Sir or Madam,

I am interested in purchasing a property (care facility) and the resulting depreciation possibilities on taxable income.

The purchase of the property leads to the following tax benefits, which reduce my taxable income:
- Over 50 years, 2% of the construction costs can be depreciated annually for wear and tear (building depreciation).
- In addition, there is a 10-year special depreciation of 10% annually for furnishings.
- Furthermore, the loan interest can reduce the taxable income.

Now I am considering founding a real estate partnership (GbR) with another person with a 50/50 ownership ratio.

Question (1) - Tax benefits
If we acquire the property through the GbR, can we still claim the aforementioned tax benefits?

Question (2) - Tax return
I imagine the process to be that first the real estate GbR has to submit a tax return to the tax office. Subsequently, each partner of the GbR can claim the above-mentioned tax benefits according to their share? This means that I can claim 1% depreciation (building depreciation) and 5% special depreciation in my own tax return? Or does the GbR utilize these tax benefits? I would not understand how the process works in the latter case.

Question (3) - GbR agreement
Furthermore, I have a question about whether a detailed contract or just a brief agreement is sufficient when founding a real estate GbR? Or are there other options?

Thank you very much.

Anton Pernitschka

Dear inquirer,

In the context of an initial consultation and your fee commitment, in compliance with the regulations of this forum, I would like to answer your questions.

The listed "tax advantages" are also available to you when establishing a real estate GbR.

In a unified determination declaration, the GbR must inform the tax office of the income from renting and leasing or from business operations. In this process, the mentioned advertising costs or operating expenses are offset against the income. The surplus or profit thus determined is divided among the participating partners - in this case 50/50 according to the circumstances presented.

The tax office of the GbR informs the relevant tax offices of the partners about the respective surpluses or profit shares. This ensures that these participation results are taken into account in the income tax assessments of the partners. In this way, the "tax advantages" are also proportionally considered for you.

If the acquisition of a property is already specified in the purpose of the GbR, the contract requires notarial certification (§ 311b paragraph 1 of the German Civil Code).

The response was based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.

Sincerely,

Anton Pernitschka
Tax advisor