Demolition costs Production costs for renting out parking spaces
January 13, 2021 | 25,00 EUR | answered by Steuerberater Knut Christiansen
Hello,
- We purchased an older house in 2016. It has been unoccupied/unrented since then.
- We had it demolished by a demolition company at the end of 2020.
- We would like to rent out the now vacant space as a parking lot (2 parking spaces). We plan to rent out the parking spaces from spring 2021 onwards.
- We are private individuals.
Can we deduct the costs of demolishing the house as rental expenses (as production costs) for tax purposes? If so, how?
Can we deduct the costs of constructing the parking spaces (graveling the area) as rental expenses for tax purposes?
Thank you!
Hello,
I am happy to answer your question as part of an initial consultation.
The demolition costs as well as the costs of creating the parking spaces are part of the production costs of the new parking areas. You can then claim them through depreciation over the normal useful life. According to the depreciation table, the useful life of parking spaces on gravel/gravel is 9 years. Therefore, you could evenly distribute the costs over 9 years (initially pro rata in the year of completion --> for example, for 03/2021 then in 2021 for 10/12 of the costs).
Please note that the remaining book value of the house may still represent expenses for tax purposes. If you acquired the house with the intention of demolition, the book value of the house should also be included in the production costs of the parking lot. If it was not acquired with the intention of demolition, the remaining book value could be claimed in the year of demolition (see https://www.haufe.de/finance/haufe-finance-office-premium/gebaeude-steuerliche-behandlung-der-abbruchkosten_idesk_PI20354_HI2073226.html)
I hope this has answered your question, if not feel free to ask for further clarification.
I would like to point out that this forum cannot replace a detailed and personal tax consultation, but is mainly intended to provide an initial tax assessment. Adding or omitting relevant information could result in a different legal assessment of your issue.
Best regards
Knut Christiansen
Tax consultant
