Maintenance expenses after inheritance settlement
March 4, 2011 | 25,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I have been the owner of an eighth share of a condominium since 1976. In 2008, I inherited another 3 eighths. The apartment has been vacant since then, but was habitable (intention to sell). Since 2010, I have had the intention to rent out and, through an inheritance agreement, became the sole owner by paying out my sister. The apartment has been rented out since 01.03.11. In 2010, I had maintenance expenses of 12,000 euros, and in 2011, another 10,000. All windows and interior doors were replaced, some ceilings and floors, the heating and hot water system, and the bathroom with new pipes, sanitary objects, and tiles. The standard was overall maintained, just brought up to date. Nothing that is now there was not there before. (even a toilet has been removed)
Can I deduct the costs directly, do I have to depreciate them, or is it a mix, does the 15% restriction apply in this case? Does the inheritance settlement count as acquisition in this context? Are there references to support this?
Dear client,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment within a first consultation:
Regarding the 4/8 that already belonged to you before the payout to your sister from the condominium, there is no acquisition process. Regarding the payout to your sister of the remaining 4/8 or half, there is an acquisition process. In this respect, a partially remunerated acquisition exists for the half, for this half the 15% limit of § 6 paragraph 1 No. 1a EStG applies, i.e. the proportional costs that have been incurred within 3 years after the payout to the sister for renovation purposes may not exceed 15% of the acquired building value from the sister in total during this period. You must deduct the included value added tax from the proportional costs, as only net amounts are included in the calculation of the 15% limit. In any case, you can claim 50% of the renovation costs for the years 2010 and 2011 as immediately deductible maintenance expenses, whether the other half can also be deducted depends on the 15% limit. Due to the lack of numbers provided, I cannot make a final statement. You should definitely consult a tax advisor before making any further expenses for the condominium.
I hope I could be of assistance.
Best regards,
Ulrich Stiller
Tax advisor/Diploma in Business Administration
