Deduction of credit interest, among other things, for a partially rented apartment - with security through another apartment and tax implications for possible future owner occupancy.
I am planning to purchase a condominium to be rented out, possibly furnished. (New apartment)
To finance the same, I will take out a loan, possibly a 100% financing or a so-called 110% financing (including real estate agent, notary, and other ancillary costs). In order to obtain a 110% loan or to generally get a better interest rate from the bank, I would likely have to provide another apartment that I already own (old apartment) as collateral or take out the loan fully or partially on this apartment (as its value is higher). The old apartment is rented out (from the beginning), the loan interest for this apartment and other expenses have been and will therefore be potentially tax deductible. (The loan repayment for the old apartment is currently ongoing, but the apartment will be paid off in spring 2018 or by the end of this year if a special payment is made in December 2017.)
I have several questions regarding this situation:
- If I take out a mortgage on the old apartment to finance the new apartment, can the loan still be fully tax deductible as an expense for the new apartment? Is it advisable to do this from a tax perspective, or could the tax office cause problems? What legal aspects should be considered in this case?
Is it more tax efficient to secure the loan for the new apartment partially with a mortgage on the old apartment (and the remainder with a mortgage on the new apartment) or to secure this loan completely with a mortgage on the old apartment?
- Do I need to consider anything else from a tax perspective if the tax deduction for the loan interest for the new apartment is not possible when taking out a loan on the old apartment for financing reasons, and it is unavoidable to burden the old apartment at least partially with a loan and a partial mortgage (thus losing the tax advantage for this interest/costs for the mortgage creation, etc.)?
- Would it be advisable to agree on a discount on the loan in the above scenario?
- What are the tax implications if I were to use this apartment for personal use at some point in the future? Do I have to repay the tax benefit or does the tax benefit essentially stop from the time of personal use? Are there certain deadlines after which personal use is tax-free possible? (Also in terms of potential furniture depreciation - if the furniture has already been fully depreciated or if it hasn't been fully depreciated yet)?
- What would be the tax consequences if I were to initially rent out the new apartment, then use it for personal use, and possibly rent it out again later? Would the tax depreciation start again? (including the impact on the furniture, etc.)
And finally:
What would be the tax situation if the apartment, located in a recreational area, was used for personal use for a few months of the year (up to 5 months - over the summer) after renovation, and rented out for the rest of the time (7 months in winter), possibly with a multi-year lease over this period? (including the impact on the furniture)
