Discounted rental
November 9, 2020 | 28,00 EUR | answered by Steuerberater Knut Christiansen
Dear Sir or Madam,
I have the following tax case:
I live in a two-family house with my family, which is owned by me and my wife. We rent out the other unit to my wife's parents at a lower price. The apartment was first rented out in 12/2019 and was included in our 2019 income tax return. After submitting the income tax return, the responsible tax office requested further documents, including the rental agreement, which I submitted.
Unfortunately, I mistakenly based the calculation of the local rent on incorrect information and used an average cold rent from several neighboring communities as a basis. I have now received notification from the tax office that a discounted rental exists and that the advertising costs will be reduced accordingly for the years 2019 and 2020.
The rent we requested is 555€ - according to the tax office, it should be at least 631€.
Since rent was only paid for one month in 2019, I would accept the reduction for this year.
What are my options now? Can I increase the rent retroactively to €631 from 01.01.2020 in agreement with the tenants and request the difference? Or will this not be accepted by the tax office?
Thank you for your help.
Good day,
Thank you for using frag-einen.com!
In principle, I see it that you can increase the rent at least from now on (e.g. November), so that a partial reduction can no longer be made in the future if the cold rent is customary in the area.
A retrospective increase and subsequent demand could be considered non-customary, as it concerns parents/in-laws, so the tax office could possibly accuse you of abuse of design. This would result in the retrospective rent increase not being recognized. On the other hand, you have nothing to lose and should at least try to demand the rent from January 2020 onwards. It is important that the lease is adjusted and the rent is actually paid. Otherwise, it would fail due to a lack of serious implementation.
I hope this answers your question, otherwise feel free to ask additional questions free of charge.
I would like to point out that this forum cannot replace comprehensive and personal tax advice, 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.
Kind regards,
Knut Christiansen
Tax consultant
