What tax implications does the conversion of a rented property into a self-used property have?
January 23, 2023 | 50,00 EUR | answered by Mia Pilz
Dear tax advisor,
My name is Mia Otremka and I have a question regarding the tax implications of converting a rented property into a self-used property. Currently, I own an apartment that I have rented out, generating regular rental income. Now I am considering moving into this apartment myself and I am wondering how this would affect me tax-wise.
The current situation is as follows: I have been renting out the apartment for several years and regularly paying the corresponding taxes on the rental income. Through the rental, I make a profit that is declared in my annual tax return. However, I now wish to use the apartment for my own use and am concerned about how this could change my tax situation.
My concerns are that converting the rented property into a self-used property could bring new tax regulations and obligations for me. I would like to clarify in advance what specific impact this could have on my tax burden and if there are any ways to avoid or minimize any tax disadvantages.
Therefore, my question to you is: What would be the tax consequences of converting my rented apartment into a self-used property? Are there ways to minimize or avoid tax burdens? What tax aspects should I definitely be aware of in such a conversion?
I look forward to your expertise and thank you in advance for your help.
Sincerely,
Mia Otremka
Dear Mrs. Otremka,
Thank you for your question regarding the tax implications of converting a rented property into a self-used property. It is understandable that you are concerned about possible tax consequences and would like to clarify in advance how the conversion could affect your tax burden.
If you wish to use your rented apartment for your own use, there are indeed tax aspects that you should consider. First of all, it is important to know that when renting out a property, income from renting and leasing is generated according to § 21 EStG. This income must be declared in your annual tax return and is subject to income tax.
If you now want to use the apartment for yourself, the rental income and thus the income from renting and leasing will no longer apply. This means that in the future you will no longer generate rental income and therefore will not have to pay taxes on it. This could have a positive impact on your tax burden, as you will no longer have to pay taxes on income from renting and leasing.
However, there are also tax consequences associated with the self-use of a property. For example, you must be aware that you can no longer claim any expenses related to the rental, such as costs for repairs, maintenance, management, or financing costs. These costs can no longer be claimed as deductible expenses for income tax in the future.
Another important aspect to consider is the so-called speculation period. If you use the apartment for yourself and sell it within 10 years of acquisition, there may be taxation of capital gains according to § 23 EStG. You should consider whether you want to use the apartment for yourself in the long term or if a sale within the speculation period is a possibility.
To minimize or avoid tax burdens, it would be advisable to consult a tax advisor. A tax advisor can help you analyze your individual tax situation and show possible planning options. Together, you can examine how to avoid tax disadvantages and optimize your tax situation.
Overall, it can be said that converting a rented property into a self-used property can have tax implications. It is important to inform yourself in advance about the specific tax regulations and obligations in order not to overlook any tax pitfalls. A tax advisor can support you and help you optimize your tax situation.
I hope this information was helpful to you and I am happy to answer any further questions you may have.
Best regards,
Mia Pilz
Tax advisor
