Do I have to pay taxes on income from renting out vacation apartments?
January 12, 2022 | 45,00 EUR | answered by Johann Lauer
Dear tax advisor,
I am Fred Hagedorn and have been renting out holiday apartments in a tourist area for several years. So far, I have not declared the income from the rentals for tax purposes, as I assumed that these earnings are tax-free. Howeverever, I have recently heard that this is not the case and that I am required to pay taxes on the profits from the rentals.
I am somewhat concerned as I am not sure how much these taxes will amount to and whether I may have to make any repayments. Additionally, I am wondering if there may be other tax obligations related to the rentals that I was not aware of.
Could you please explain to me whether I do indeed need to pay taxes on the profits from renting out holiday apartments and approximately how much these taxes will be? Are there any ways to minimize my tax burden? And what other tax aspects do I need to consider as a landlord of holiday apartments?
I would greatly appreciate it if you could help me with these questions and provide me with possible solutions.
Thank you in advance.
Yours sincerely,
Fred Hagedorn
Dear Mr. Hagedorn,
Thank you for your inquiry regarding the tax aspects of renting out holiday apartments. It is correct that the income from renting out holiday apartments is generally subject to taxation. You must declare this income in your income tax return and pay taxes accordingly.
The amount of taxes depends on your individual tax rate, which is based on your total income. The income from renting out the apartments is added to your income and taxed at the corresponding tax rate. It is possible that you may have to pay back taxes if you have not paid taxes on rental income in previous years.
To minimize your tax burden, there are various options available. Firstly, you can claim deductible expenses related to the rental, such as maintenance costs, property tax, insurance, advertising costs, or depreciation. These expenses reduce your taxable income and therefore your tax liability.
Furthermore, you may need to consider the VAT liability. Depending on the turnover and type of rental, you can decide whether to charge VAT and claim input tax.
As a landlord of holiday apartments, you also need to consider that you may need to file a trade tax return if your income exceeds certain thresholds. Additionally, you should review the depreciation options for your property and correctly report the rental income in your tax return.
I strongly recommend that you consult with a tax advisor who can provide you with individual advice and assist you in optimizing your tax situation. I am also available for further discussion and to explore possible solutions in my online consultation hours.
I hope this information has been helpful to you and I am happy to assist you with any further questions.
Best regards,
Johann Lauer
