How can I as a landlord of apartments benefit from tax deductions?
May 2, 2023 | 40,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Max Ullmann and I own several apartments in my portfolio. So far, I have not delved deeply into tax depreciation, but I am now interested in how I, as a landlord of apartments, can benefit from it.
Currently, I regularly pay income tax on the rental income from my leased apartments. I am wondering if it is possible to depreciate the acquisition costs of the apartments for tax purposes and thereby reduce my tax burden. I am not sure if there are specific requirements I need to meet or if there are special regulations I should be aware of.
I am concerned that I may be missing out on potential tax benefits without knowing it. Therefore, it would be very helpful if you could explain to me how I, as a landlord of apartments, can benefit from tax depreciation. Are there different depreciation options I could use? How can I calculate the amount of depreciation and what documents are needed for this?
I would appreciate it if you could provide me with specific recommendations on how to optimize my tax burden as a landlord. Thank you in advance for your assistance!
Sincerely,
Max Ullmann
Dear Max Ullmann,
Thank you for your inquiry regarding tax depreciation as a landlord of residential properties. It is very important as a landlord to take advantage of all tax options to reduce your tax burden and optimize your profits.
As a landlord of residential properties, you can indeed claim tax depreciation on the purchase costs of your properties. This depreciation is called linear depreciation and allows you to claim the purchase costs over a certain period of time for tax purposes. The usual depreciation period for residential buildings is 50 years. This means that you can report a portion of the purchase costs as depreciation in your tax return each year.
To calculate the amount of depreciation, you first need to determine the purchase price of your property. This consists of the purchase price of the property as well as acquisition costs (e.g. broker fees, notary costs). Then you divide the total amount by the depreciation period to determine the annual depreciation amount.
There is also the option to take advantage of special depreciation. These apply to newly constructed apartments and can be claimed in addition to linear depreciation. The special depreciation is usually 2% of the purchase costs per year over a period of four years.
To benefit from these tax advantages, it is important to keep all relevant documents. These include the purchase agreement of the property, invoices for acquisition costs, and depreciation tables for linear depreciation.
I recommend contacting a tax advisor to discuss your individual situation and receive specific recommendations. An experienced tax advisor can help you optimize your tax burden as a landlord and take advantage of all tax options.
I hope this information is helpful to you and I am happy to answer any further questions you may have.
Best regards,
Johann Lauer
