How can I manage my rental income in a tax-efficient manner?
May 3, 2022 | 40,00 EUR | answered by Tina Ullmann
Dear tax advisor,
My name is Tatiana Schlattmann and I am the owner of several properties that I rent out. In recent years, I have noticed that the taxation of my rental income is becoming increasingly complex and I am unsure if I am managing everything in a tax-efficient manner. I would like to ensure that I am not missing out on any tax benefits while still acting legally and correctly.
Currently, I keep track of my income and expenses, but I am unsure if I am maximizing all tax opportunities. I have heard that there are, for example, depreciation, deductible expenses, and tax breaks that I could take advantage of, but I am not sure how to properly declare them in my tax return and what documents I need for that.
My concerns are that I may be paying too much in taxes or making mistakes that could lead to extra payments. Additionally, I would like to manage my rental income in a tax-efficient manner in the long term, in order to maximize my income and optimize my finances.
Could you please explain to me what tax options I have to effectively manage my rental income? Are there specific depreciation methods that I should use? What deductible expenses can I claim and what documents do I need for that? Are there any other tips or recommendations that you can give me to optimize my tax situation?
Thank you in advance for your help and support.
Best regards,
Tatiana Schlattmann
Dear Mrs. Schlattmann,
Thank you for your inquiry regarding the tax optimization of your rental income from leased properties. As a tax advisor specializing in real estate taxation, I am pleased to assist you in clarifying your questions.
First and foremost, it is very important that you properly document your income and expenses and keep proper books. This is the foundation for a correct and optimized tax return. You have already mentioned that you do this, which is very good.
Regarding tax opportunities for landlords, there are various measures you can take to optimize your tax situation. One of the most important is the depreciation of buildings. As a landlord, you can deduct the purchase or construction costs of your property over a certain period for tax purposes. This is called straight-line depreciation. Additionally, you can also deduct maintenance or renovation costs as deductible expenses.
Other deductible expenses include costs for rental (e.g. agency fees), management costs, insurance, loan interest, property tax, as well as minor repairs and renovations. It is important that you keep all receipts and invoices for these expenses carefully, as the tax office may request proof in case of doubt.
In addition to depreciation and deductible expenses, there are also tax benefits that you can take advantage of, such as the special depreciation for new rental housing construction or the historic preservation depreciation for the preservation of listed buildings.
To optimize your tax situation in the long term, I recommend consulting with a tax advisor regularly and having your tax return professionally prepared. A good tax advisor can help you maximize all tax opportunities and avoid mistakes.
I hope that this information has been helpful to you. If you have any further questions or would like a more detailed consultation, I am at your disposal.
Best regards,
Tina Ullmann, Tax Advisor
