Can I deduct renovation or repair costs to prepare a rental property before the start of leasing?
March 30, 2022 | 40,00 EUR | answered by Steuerberater Knut Christiansen
Hello,
I am considering dividing my deceased parents' house into two parts and renting out one part. This will require renovations. Additionally, the heating system needs to be replaced, bathrooms need to be renovated, windows and doors need repairs, and overall renovation work needs to be done.
Can I deduct these "preparatory work" expenses for renting from my taxes, even if the house is currently not rented out? If so, can I still claim the deductions if the repairs, for example, take place this year and I can only start renting out the property in 2023 or 2024 after completing all the work?
Thank you.
Kind regards.
Good morning,
I am happy to provide you with the following feedback, also in light of the fee granted.
If you can credibly demonstrate that you intend to rent out the property, such costs can generally be claimed as anticipated advertising expenses, even if the rental only takes place after the completion of the measure. The costs are generally deductible in the year of payment. Evidence can usually be provided either a) when an actual rental takes place later on, or b) when there are concrete rental efforts (advertisements at the given time).
Due to the gratuitous acquisition, there are generally no acquisition-related production costs even in the case of higher maintenance costs that would lead to depreciation. However, if there is a standard increase or improvement in functionality, production costs may be present. This may be the case, for example, if measures are carried out on a total of 3 central equipment features (heating, electrical, plumbing, and windows). See also: https://datenbank.nwb.de/Dokument/88567/
I hope this answers your question, otherwise feel free to ask for further clarification.
I would like to point out that this forum cannot replace a comprehensive 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 consultant
