Application of the 15 percent limit for acquisition-related maintenance expenses
June 3, 2020 | 50,00 EUR | answered by Steuerberater Knut Christiansen
We paid a special levy of 14 TEUR each for the renovation of the bathroom in our condominium in 2018. A corresponding resolution of the owners' meeting from 2017 is available. It is clearly maintenance expenses. The bathroom renovation was necessary due to outdated pipes in the building. The installed sanitary fixtures could not be reused. The bathroom was not upgraded, but only restored to its condition before the measure.
Since two of the three apartments were purchased in 2016, the 15% threshold for acquisition-related renovations may be relevant. However, we would like to deduct the costs as quickly as possible and not depreciate them, we have the following questions:
1) Does the 15% threshold also apply to maintenance expenses?
If 1 applies and the threshold is applicable:
The costs were incurred in 2018 according to the statement (approximately 12 TEUR). The costs were only approved at the end of 2019 during the owners' meeting. Which date now applies to determine whether the 15% threshold is applicable? 2018 or 2019? Because it is always said that the decision of the owners is necessary.
Thank you
Good day and thank you for using ask-auditor.com!
I would like to answer your questions as part of an initial consultation.
According to the latest case law, acquisition-related production costs are always incurred if expenses for maintenance (including cosmetic repairs) arise within three years after the purchase of the property and the total cost (net --> without VAT) exceeds 15% of the building costs (i.e. without land). Therefore, your question should be answered with "Yes."
If the property was acquired before January 1, 2017, the taxpayer can request that cosmetic repairs be treated according to the "old" case law, in which case they would still be considered immediately deductible expenses. Cosmetic repairs include wallpapering, painting or whitewashing walls and ceilings, painting floors, radiators, interior and exterior doors, and windows (BFH, judgment of June 14, 2016, IX R 25/14, BFH/NV 2016 p. 1617, para. 16).
The application of § 6 para. 1 No. 1a EStG requires the implementation of the measures within the first three years, not the payment. Therefore, the assessment should be conducted in 2018.
Here is the wording from the law:
The production costs of a building also include expenses for repair and modernization measures carried out within three years after the acquisition of the building if the expenses, excluding VAT, exceed 15 percent of the acquisition costs of the building (acquisition-related production costs).
I hope this answers your questions, otherwise feel free to ask additional questions at no cost.
I would like to point out that this forum cannot replace a detailed and personal tax consultation, but is primarily intended to provide an initial tax assessment. By adding or omitting relevant information, the legal assessment of your issue could be different.
Best regards,
Knut Christiansen
Tax advisor
