Do I have to pay sales tax as a landlord?
April 2, 2024 | 50,00 EUR | answered by Johann Lauer
Dear tax consultant,
my name is Albrecht Wagner and for several years I have been renting out a holiday apartment in a touristically attractive region. So far, as a small entrepreneur according to § 19 UStG, I have not calculated and paid sales tax on the rental income. However, I have heard that under certain circumstances it may be necessary for landlords to pay sales tax.
My current situation is as follows: I rent out the holiday apartment to holiday guests and generate annual rental income of approximately 15,000 euros. I have no other income from rented properties.
My concerns are that I am unsure whether I have to pay sales tax as a landlord and if so, what impact this could have on my income and tax situation. I also wonder if I could claim input tax if I were to switch to standard taxation, and whether this would be beneficial for me.
Therefore, my specific question to you as a tax consultant: Do I have to pay sales tax as a landlord and if so, under what conditions? What are the advantages and disadvantages for me if I were to switch to standard taxation, and how would this affect my tax situation?
Thank you in advance for your help and support.
Sincerely,
Albrecht Wagner
Dear Mr. Wagner,
Thank you for your inquiry regarding the value-added tax liability as a landlord of a holiday apartment. I would like to provide you with a detailed answer to your questions.
Generally, landlords of apartments or holiday homes are not obligated to charge value-added tax on their rental income if they are considered small business owners according to § 19 UStG and therefore exempt from value-added tax. This means that you have been acting correctly by not charging and paying value-added tax.
However, there are exceptions to this rule. If you as a landlord exceed certain turnover thresholds, you may also opt for value-added tax liability as a small business owner. Currently, this threshold is 22,000 euros per calendar year. Since you have stated that your rental income is around 15,000 euros annually, you are currently below this threshold and therefore not obligated to charge value-added tax.
If your rental income were to increase above this threshold in the future, you would need to consider value-added tax. In this case, you have the option to switch to the regular taxation system. This would involve charging value-added tax on your rental income, but you could also claim input tax, for example for renovation or maintenance costs. This could have a potentially tax-reducing effect.
It is important that in such a case, you consult with a tax advisor or a specialist in value-added tax to assess your individual situation and determine the best options for you. There are various advantages and disadvantages to switching to the regular taxation system that need to be weighed on a case-by-case basis.
I hope that this information has been helpful to you. If you have any further questions or require individual advice, I am at your disposal.
Yours sincerely,
Johann Lauer
