Allocation of SFH purchase price for financing structuring
October 26, 2014 | 80,00 EUR | answered by Anton Pernitschka
I would like to privately purchase a single-family house with a small granny flat. As I run a small business (legal form UG), the granny flat, as well as a garage and two additional basement rooms in the house, should be rented out to the company. The rooms for rent have separate access and can be locked. The basement rooms are intended to be used as a workshop and storage space, and the granny flat as an office. The private apartment is located on the upper floor.
Now, I would like to finance the rental spaces in the basement with as much credit as possible, and pay for the privately used apartment on the ground floor mainly with own funds. Therefore, the purchase price must be split into several parts and separately stated in the purchase contract (along with separate payment).
Questions
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1. If we divide based purely on living space, the granny flat is very small at 25% compared to the total residential area (including the private apartment above). If we divide based on usable space (including basement and garage), the share in the basement would be significantly larger (about 40%), and therefore the targeted tax advantage as well, but will this be accepted by the tax office? Is usable space not less valuable than living space? Is there a division key that weights the different uses of spaces in the building? Or do we need to approach this differently (mixed-use building)? How do I calculate the area shares for the purchase price division based on the type of use?
1b. In my case, how should regular non-consumption-dependent additional costs (property tax, insurance, etc.) be divided, by living space, by usable space, or in a different way?
2a. If it is possible to divide the purchase price based on usable space, could I rent out the currently undeveloped attic as storage space (thus usable space) considering a discount due to the sloping ceilings - this would significantly increase the proportion of rented usable space in the building (to 60%). Would this work?
2b. Would it be disadvantageous if the attic is only accessible via a staircase from the private apartment? A separate entrance could be retrofitted - would the costs of establishing this separate access be allocated 100% to the rented part of the property (attic), or should these costs be divided according to the area shares (private/rented)?
3. The attic is planned to be converted into living space at a later date - however, with the intention of also renting out the rooms to the company (office space). Could I already consider the area in the attic in the purchase price division now (regardless of whether point 2a works)? If yes - how would that be calculated, or how should I proceed there?
4a. The installation of a photovoltaic system on the roof of the house is also planned. The roof area could also be rented out to the business for this purpose. The income from this would flow into the business. What proportion could a house roof be divided for the purchase price?
4b. At the time of purchase, the attic is not developed, and the roof covering (the entire building) is already 50 years old. If the roof structure is renewed, a roof insulation and new tiling are carried out, could this measure be deducted as maintenance costs immediately (provided I wait the 3 years after the purchase)?
4c. If additional roof windows are installed at the same time (but with a separate invoice), do only the roof windows count as subsequent production costs, but the (much more expensive) roof renewal continues to be considered a maintenance measure?
4d. Or would it be better to link the roof renewal with the photovoltaic system installation (a stable installation base must be created for this)? However, the costs of the roof renewal would then be borne by the company (operating expenses including input tax deduction), and not by me as the landlord (advertising costs deduction). Could such a constellation be advantageous, or is it not possible?
5. Alternatively: would it perhaps be easier and even better to rent the entire house to the company, and then rent only the private apartment on the ground floor back from the company as a sub-tenant, possibly at a 70% rent? Does something like this work?
Thank you in advance!
Dear questioner,
As part of an initial consultation and in consideration of your fee, in accordance with the regulations of this forum, I would like to answer your questions.
According to the Federal Fiscal Court (BFH) ruling of 10.10.2000, BStBl II 2001, 183, the total purchase price for a developed property should be divided not using the so-called residual value method, but according to the ratio of the market values or partial values of the land on one hand and the building on the other.
The division of the purchase price is based on the regulations for determining market values based on the Building Code (asset value method according to the Real Estate Valuation Ordinance). This is a qualified estimate that can be expertly justified and refuted.
The Federal Ministry of Finance published a guide for calculating the division of a property purchase price in January 2014 with form KPA 2/14. This guide explains the calculation scheme of the division using an example.
Of course, it is possible to deviate from this division method.
A building division based on area is permissible based on both living area and usable area. This is likely also accepted by the tax office in your case.
There are two or even three regulations for calculating living areas. The Living Area Ordinance, the DIN standard 277 "Floor areas and volumes of buildings in construction", and occasionally the outdated DIN 283 for calculating living areas. Publicly funded housing must be calculated according to the Living Area Ordinance (Federal Law Gazette I 2003, 2346), while privately financed housing can be calculated using either the Living Area Ordinance or DIN standard 277. However, DIN standard 277 does not calculate living areas, but rather the usable and traffic areas of a dwelling. The DIN 283 used to be used for living area calculation according to DIN standards, but it is no longer valid.
Both calculation methods are based on the floor area, which is determined in the first step. This floor area is divided into usable, traffic, or functional areas according to DIN standard 277. On the other hand, the Living Area Ordinance evaluates the floor areas of individual rooms and outdoor spaces in terms of their residential use. Both calculation methods can lead to different results.
One way to distribute ancillary costs is by living area (according to the Living Area Ordinance). Distribution based on built-up space is also permissible. However, it is not necessary for all types of ancillary costs to use the same distribution key.
In your case, a division based on usable area could also include the attic.
The costs for creating a separate access to the attic would likely need to be divided in your case.
The intended commercial use of the attic cannot be considered at the time of the purchase price division. Only when such a use actually exists can the commercial use portion be included in the business assets (and depreciation claimed).
A division of the roof area should be made according to the living area calculation based on the above criteria. Various types of compensation are possible for roof rental, such as a flat rate per occupied square meter. In this case, the amount usually ranges between 2 € and 4.40 € per sqm annually, depending on the location and characteristics of the property.
Roof renewal can be considered maintenance expenses that are immediately deductible in your case.
If a combination of measures increases the utility value in three of the four areas of sanitary, heating, electrical, and windows, raising the standard overall, it constitutes production costs. In your case, just installing roof windows may not be sufficient for this.
The photovoltaic system on the roof of a building is not an essential part of the building, but an operational fixture. The roof structure is not part of the photovoltaic system but belongs to the building on which it is mounted. Expenses for renovating the roof of a privately used building are not subsequent production costs of the building but partially operationally motivated maintenance expenses, which are deductible as business expenses.
In your case, the roof renewal cannot be linked to the photovoltaic system.
The division of such mixed expenses depends on the use of the entire building. The relevant usage ratios of the entire building include not only the internal floor area but also the roof of the building. Usable areas within the building and on its roof cannot simply be added together because they are regularly not comparable. Therefore, the ratio of the fictitious rents achievable for the building (non-operational) and for the roof (operational) can be used as a division basis, just as with value-added tax (VAT) - (BFH ruling of 14.03.2012, BFH/NV 2012, 1192). According to BayLfS from 17.06.2013, a non-objection threshold of 3 € per sqm with modules covering the area can be assumed for this calculation, with the burden of
