Tax deductibility of a privately rented apartment
May 28, 2015 | 50,00 EUR | answered by StB Patrick Färber
Dear Sir or Madam,
I would like to purchase a new condominium and then live in it myself. My old apartment is also a condominium and almost paid off - I would like to keep it and rent it out to someone else. To secure a loan from the bank, I would like to refinance my old apartment.
Is it possible to apply the interest burden that will then arise to the rented-out apartment and make it tax deductible?
Thank you and best regards.
Dear inquirer,
I understand your question to mean that you are taking out a loan to purchase the new (owner-occupied) apartment, using the old apartment as collateral, which will then be rented out. Is that correct? You want to somehow make the loan interest tax deductible.
When it comes to loan interest and rental properties, it depends on the causal relationship between the loan and the property, meaning you cannot simply switch the allocation of a loan from one property to another. In this case, it would be said that the loan is being taken out and secured for the purchase of the new, owner-occupied apartment. The fact that this apartment will be rented out does not matter, because the interest is not being spent to generate rental income (from the old apartment).
Therefore, in this scenario, I do not see a way to deduct the interest as advertising costs, unless I have misunderstood the situation. In that case, please do not hesitate to contact me again.
With regretful regards,
Tax consultant Patrick Färber
