Ask a tax advisor on the topic of Real estate taxation

Trouble with the 3-year deadline Maintenance versus manufacturing costs

May 13, 2017 | 50,00 EUR | answered by Ginster Frank

Topic: "Cut-off date for the 3-year rule regarding acquisition-related costs of a property"

I bought a house in March 2013. The official (tax) acquisition date was March 28, 2013.
In spring 2016, the roof was completely renovated, including thermal insulation.

I had already pointed out in the tax return that the roof renovation should not be considered acquisition-related costs because the 3-year deadline had been met.
The confirmation of the roofing contractor, submitted to the tax office, bears the date April 6, 2016, and the payment to the roofer was made on April 11, 2016.

However, the tax office does not accept this and claims that the roof renovation carried out in "February and March 2016" counts as acquisition-related costs (resulting in only an increase in depreciation).

I am not sure how the tax office knows about the period of February and March 2016. This information is not evident from the tax return documents.

What further steps do you recommend? Lodge an objection against the decision? Legal action? Another certificate from the roofing contractor (who indeed started work in March 2016)?

Ginster Frank

Good evening,

We would be happy to answer your inquiry regarding the application of the 15% rule.

In principle, the 3-year rule in your case ends on 28.03.2016. However, if the measure was already started before the deadline, this measure also falls under the 15% rule even if invoiced after 28.03.2016.
Ultimately, it must be evident to the tax office from your documents when the craftsman started. This could possibly be seen from the invoice if the craftsman has specified the period of performance.

We would advise you to first lodge an objection within the deadline and then have the matter reviewed by a tax advisor. This definitely requires the submission of the complete tax returns for 2013-2016 and the receipts for 2016.

We would be happy to assist you in this matter if needed.

Best regards,

Frank Ginster
Diploma in Taxation
Tax Advisor