Abatement of credit interest
January 28, 2012 | 30,00 EUR | answered by Andreas Schupp
I will now rent out the apartment that I have been living in myself. This apartment was debt-free. Now I am buying a new apartment for personal use and will need to take out a loan for it, as my equity is tied up in the old apartment. How can I structure the loan so that I can claim the costs as tax-deductible under rental income in the future?
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into consideration your efforts and the rules of this platform.
Please note that my explanations are based on the situation you have presented, and that adding, omitting, or changing life circumstances or the ambiguity of the information provided can affect the correct tax result.
Interest expenses can only be deducted as advertising costs if they are related to generating income (§ 9 EStG).
Since there is no longer a loan to pay for the rented apartment, interest expenses can only be deducted if you use the credit for example for maintenance expenses in this apartment and use the amount X for it.
In this case, a loan would be given which can be divided according to the respective acquisition costs of the expenses financed with it.
For example, loan €200,000, of which €180,000 for apartment purchase - apartment renovation €20,000.
In this case, 10% of the loan would be used for rental income and therefore tax deductible.
However, the loan costs for the self-occupied apartment cannot be deducted according to § 12 EStG, as these are costs related to private living.
You can only claim expenses for tax purposes that are related to income generation.
Furthermore, it is advisable to first pay off the debts related to privacy and then those related to income generation.
I hope that my explanations have helped you.
If there are still uncertainties, please use the option to ask further questions.
Best regards,
Andreas Schupp
TAX ADVISOR
