How can I deduct my operating costs for tax purposes?
April 6, 2023 | 50,00 EUR | answered by Petra Höfer
Dear tax advisor,
My name is Claudia Blumberg and I own several rented properties. This year, I received a utility bill for the first time and I am unsure of how to claim it on my taxes.
The utility bill includes various items such as property tax, insurance, caretaker costs, waste disposal, and repair costs. I have already collected all receipts and invoices, but I am uncertain about which costs are deductible and how to report them in my tax return.
My main concern is to minimize my tax burden and make optimal use of the utility costs of my rented properties. I am worried that I may make mistakes in claiming the utility bill on my taxes, which could result in tax payments or even penalties.
Could you please explain to me how to correctly claim the utility bill of my rented properties on my taxes? Are there specific forms I need to fill out or special information I need to provide? Which costs are deductible and how can I best report them in my tax return?
Thank you in advance for your help and support.
Sincerely,
Claudia Blumberg
Dear Ms. Blumberg,
Thank you for your inquiry regarding the tax deduction of the operating expenses of your rented properties. It is understandable that you are unsure how to correctly report the costs in your tax return in order to minimize your tax burden and avoid possible errors. I will be happy to explain in detail how you can optimally utilize the operating expense statement.
First and foremost, it is important to know that the operating costs included in your statement can generally be claimed as operating expenses against rental and leasing income. These costs include property tax, insurance, janitorial costs, waste disposal, and repair costs, among others. You can deduct these costs from your rental income, thereby reducing your taxable income.
To correctly report the operating costs in your tax return, you should collect and retain all receipts and invoices. You do not need to fill out any specific forms, but can simply report the operating costs in Annex V of your income tax return. In this annex, you can itemize the individual operating cost items and enter the total costs.
It is important that you document the operating costs in a traceable and transparent manner so that you can provide evidence in case of an audit by the tax office. Make sure that the costs were actually incurred during the billing period and are reasonable. Costs such as cosmetic repairs or modernization expenses that are not chargeable cannot be deducted.
In your tax return, you should report the operating costs as operating expenses and enter them under the appropriate line in Annex V. Make sure not to claim the costs twice if they are already included in the tenants' utilities.
Finally, I recommend consulting a tax advisor for further questions or uncertainties, who can assist you in optimizing the tax treatment of your rented properties. I hope this information was helpful to you and wish you success in claiming your operating expenses for tax purposes.
Best regards,
Petra Höfer
