Which depreciations can I claim for my rented property?
May 2, 2024 | 40,00 EUR | answered by Mia Pilz
Dear Sir or Madam,
I am Piotr Helbig and have been renting out a property in Leipzig for several years. In recent years, I have noticed that the tax burden on my rental income has been steadily increasing. I am concerned that I may not be taking advantage of all the opportunities to depreciate my property, resulting in unnecessarily high taxes.
My property consists of several apartments that I rent out. I have carried out some renovation work in recent years, such as modernizing the bathroom and renewing the heating system. Additionally, I have regularly had maintenance work done.
I have heard that there are various depreciation options that I can claim for my rented property, such as straight-line depreciation, declining balance depreciation, or depreciation of modernization and maintenance costs.
My question to you is: What depreciation can I claim for my rented property? What requirements do I need to meet and how can I ensure that I fully utilize all relevant depreciation opportunities? Are there any other tax aspects that I should consider when depreciating my property?
I would greatly appreciate your expert advice to optimize my tax burden and improve my financial situation.
Thank you in advance for your support.
Sincerely,
Piotr Helbig
Dear Mr. Helbig,
Thank you for your inquiry regarding depreciation options for your rented property in Leipzig. As an expert in real estate taxation, I can assist you and provide you with all the relevant information on this topic.
First and foremost, it is important to know that as a landlord of a property, you can claim various depreciation options to reduce your tax burden. The depreciation options depend on various factors, such as the type of investments, the useful life of the property, and the type of rental.
One of the most well-known depreciation options is straight-line depreciation. In this method, the acquisition or production cost of the property is evenly distributed over the useful life. The useful life for residential buildings is typically 50 years. You can claim this depreciation method for your property as long as it is rented out.
Another option is declining balance depreciation, where higher depreciation can be claimed in the early years. This method can be particularly useful for modernization and maintenance costs. However, it is important to note that declining balance depreciation leads to higher tax savings in the early years, but lower depreciation in the later years.
In addition to the mentioned depreciation options, you can also claim the costs for modernization and maintenance work as advertising expenses. It is important that these are expenses that serve the maintenance and improvement of the rented property. Deductible costs include repairs, renovations, maintenance work, and energy costs.
To ensure that you fully utilize all relevant depreciation options, I recommend seeking advice from a tax advisor or an expert in real estate taxation. An expert can assess your individual situation and show you the best possible tax structuring for your rented property.
In addition to depreciation options, you should also consider other tax aspects, such as correctly recording your income and expenses, considering special depreciation allowances, or observing tax special regulations for rented properties.
I hope that this information was helpful to you, and I am available for any further questions. You are welcome to schedule a personal consultation appointment in my online office hours to discuss your tax situation in detail.
Thank you for your trust, and I wish you success in optimizing your tax burden.
Sincerely,
Mia Pilz, Tax Advisor
