How can I correctly declare my rental income for tax purposes?
August 6, 2022 | 40,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Siegfried Heck and I have been renting out several properties for a few years. So far, I have always declared my rental income directly as income from renting and leasing in my tax return. However, I have heard that there are various ways to properly tax rental income and take advantage of tax benefits.
My current situation is as follows: I rent out a total of three apartments and a house. Rental income is my main source of income and I want to make sure that I declare everything correctly for tax purposes. So far, I have not taken depreciation or special expenses into account in my tax return, as I am unsure how to claim them exactly.
My concerns are that I may overlook tax benefits and end up paying too much taxes. I would like to know what options there are to properly tax my rental income and take advantage of tax benefits. Are there depreciations that I should consider in my tax return? What special expenses can I claim? Are there any other tips to minimize my tax burden?
Thank you in advance for your help and I look forward to your response.
Best regards,
Siegfried Heck
Dear Mr. Heck,
Thank you for your inquiry regarding the tax treatment of your rental income from leasing and renting. It is very important to be aware of all possibilities to minimize your tax burden and take advantage of tax benefits. I will be happy to explain in detail the measures you can take to correctly report your rental income and utilize tax benefits.
First and foremost, it is important to know that your rental income must be reported as income from leasing and renting in your tax return. However, you can take advantage of various tax incentives to reduce your tax burden. One important possibility for this is depreciation on your rented properties.
Depreciation allows you to deduct the depreciation of your properties over time for tax purposes. You can depreciate both the acquisition costs of the properties and the costs of certain renovation or modernization measures over the useful life. This results in a reduction of your taxable income and therefore a decrease in your tax burden.
Furthermore, you can also claim certain special expenses related to your rental activity. These include costs for maintenance and repair work, administrative expenses, interest on loans taken out to finance the properties, property taxes, insurance premiums, and other expenses directly related to the rental.
Therefore, it is advisable to carefully document all expenses related to your rental activity and include them in your tax return to minimize your tax burden. Keep in mind that you should keep all information and documentation properly and completely stored to be prepared in case of a tax audit.
In addition to depreciation and special expenses, there are other tips to minimize your tax burden. For example, you can optimize your rental income by increasing rents or carrying out modernization measures to increase the value of your properties. Choosing the right tax depreciation and financing models can also have a positive impact on your tax burden.
Finally, I want to emphasize the importance of seeking expert tax advice to fully exploit all tax possibilities and utilize tax benefits. As a tax advisor, I am available to assist you with all tax matters related to your rental income from leasing and renting.
I hope this information was helpful to you and I am available for any further questions.
Best regards,
Johann Lauer Tax Advisor
