What tax regulations apply to the rental of furnished properties?
March 26, 2022 | 40,00 EUR | answered by Tatiana Seiler
Dear tax advisor,
My name is Emma Bergmann and I have recently decided to rent out one of my properties furnished. So far, I have no experience with the rental of furnished properties and I am unsure about the tax regulations that need to be considered.
The property I want to rent out is located in an attractive area and has high-quality furnishings. I already have some interested parties who are looking to rent a furnished property. My goal is to generate additional income through the rental and to rent out the property long-term.
My main concerns are that I do not know exactly how to properly declare the rental income and if there are any special regulations I need to follow. I am also unsure about the depreciation of furniture and furnishings. I want to ensure that I consider all tax aspects correctly to avoid any unpleasant surprises later on.
Can you please inform me specifically about the tax regulations for the rental of furnished properties? How do I need to declare the rental income and what options do I have for the depreciation of furniture and furnishings? Are there any special tax advantages or disadvantages for renting furnished properties compared to unfurnished properties?
Thank you in advance for your support and I look forward to your feedback.
Best regards,
Emma Bergmann
Dear Mrs. Bergmann,
Thank you for your inquiry regarding the tax regulations for renting furnished properties. It is understandable that you may feel unsure when it comes to tax aspects, especially if you have no prior experience with renting furnished properties. I will be happy to explain to you in detail which regulations you need to consider.
Firstly, you must declare the rental income you receive from renting out your furnished property as income from rental and leasing in your tax return. You must declare the gross rental income, which is the rent you receive from your tenants without deducting operating costs or other expenses.
When it comes to depreciating furniture and fixtures, you generally have the option to depreciate the purchase costs over the useful life. Depreciation is usually done linearly over a period of several years. You must ensure that the furniture and fixtures are actually used for rental purposes and not for personal use.
There are some differences in terms of specific tax advantages or disadvantages when renting furnished properties compared to unfurnished properties. Furnished rentals can sometimes be more tax advantageous as you may earn higher rental income and possibly have additional depreciation opportunities for furniture and fixtures. However, you must also consider the higher acquisition and maintenance costs.
It is important to carefully document all income and expenses related to renting out your furnished property to avoid any issues with the tax authorities in the future. I recommend seeking assistance from an experienced tax advisor to ensure that you correctly consider all tax aspects.
I hope that this information has been helpful to you. If you have any further questions, please do not hesitate to contact me.
Best regards,
Tatiana Seiler
