Inherited apartment rented out - what tax benefits?
May 5, 2011 | 30,00 EUR | answered by Michael Herrmann
I inherited a condominium right next to my owner-occupied apartment in 2007 (debt-free). The apartment stood empty for two years - since November 2009, I have been renting it to my mother and mother-in-law, at a slightly cheaper rate than usual.
How do I proceed tax-wise? I am not sure if there is any depreciation possibility here. Also, there must be some kind of advertising costs that would have to be incurred - or are they wages for household-related services? The tax return asks for acquisition and other costs everywhere, which I did not have. In 2010, repairs of approximately €5000 were incurred throughout the entire house.
Dear questioner,
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and in the context of your commitment within a first consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
You generate rental income from the rental of the apartment. All costs related to the rental are deductible as advertising expenses. They are deductible from the income.
This includes all ongoing costs and the depreciations. The basis for depreciation is the original acquisition cost. These are usually depreciated at a rate of 2% annually over a period of 50 years. If the deceased acquired the apartment within the last 50 years, you can continue to use their depreciation volume (remaining value). To do this, you need to determine the acquisition date, acquisition costs, and any depreciation already claimed.
Repair costs for the apartment are deductible, as long as they are related to the apartment. Expenses that concern the entire house, such as roof repairs, are deductible proportionally (based on living area).
I hope that these explanations have provided you with an adequate overview of the situation within the scope of your commitment and this initial consultation.
Kind regards,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant
