Ask a tax advisor on the topic of Rental / Leasing

15% maintenance cost

July 5, 2011 | 20,00 EUR | answered by Matthias Wander

Hello,

since 01.09.2009 I own a condominium which I use myself. (Value of the apartment without land = €150,000)
I intend to rent it out in the distant future as I plan to build a house. (Assuming rental from 1.7.2012)

Due to planned renovations in 2013 (facade, roof), approximately €30,000 in costs will be incurred for my rented condominium.

I naturally want to make these costs tax deductible.

Am I correct in assuming that the acquisition date of the apartment (01.09.2009) is relevant for the calculation of the 15% rule, rather than the conversion to a rental property (01.07.2012)?

Am I correct in assuming that the 15% rule will therefore expire on 01.09.2012 and all investments in the apartment can be fully deducted as operating expenses?

Am I correct in assuming that cosmetic repairs such as wallpapering and painting do not affect the 15% rule, meaning they are not included in the maximum value of 15% of €150,000 = €22,500, and therefore can be fully deducted as operating expenses?

Am I correct in assuming that from 01.07.2012 I am allowed to depreciate 2% of the acquisition value above €150,000, or do I need to somehow deduct the years of self-use before renting from the acquisition costs before calculating the 2%?

Thank you in advance.

Matthias Wander

Dear inquirer,

Thank you for your inquiry, which I would like to answer based on the information you provided and considering your situation within the scope of an initial consultation.

All of your assumptions are correct.

The 3-year period ends on 31.08.2012. The date of acquisition is decisive, not the beginning of the rental. Until this time, the 15% limit for renovation must be observed. Excluded from the 15% limit are, as you have already pointed out, expenses for maintenance work that typically occur annually (so-called cosmetic repairs). Net amounts are decisive for the examination of the 15% limit, even if no input tax deduction is possible. After the 3-year period, an examination of the 15% limit is no longer necessary. Maintenance expenses can then be deducted almost unlimited as rental expenses, unless the renovation results in a new asset or raises the standard of the building.

Your statement regarding depreciation is also correct. This amounts to 2% of the original acquisition cost of the building.

Kind regards,

Wander
Tax consultant