provision of living space
March 30, 2012 | 30,00 EUR | answered by RAin/StBin Henriette Regulla-Schiessl
Hello,
I am currently living rent-free in my parents' condominium, which they used to live in until a year ago and have never rented out. Now they have moved into their own home and I continue to live in the condominium, only paying the housing costs of 270 euros and utilities.
Now to my question:
Am I allowed to let a friend of mine live with me in this apartment free of charge without my parents having tax problems? In other words, will a hypothetical rent be estimated even if I, as a family member, mainly live there and someone else temporarily lives with me in the apartment? He is not my partner, the apartment would be registered as his residence, but there would be no rental agreement or rental costs.
I hope you can answer my question.
Sincerely,
Karin
Dear inquirer,
Thank you for your inquiry, which I am happy to answer within the scope of an initial consultation, taking into account your input and the rules of this platform. The response is based on the information provided by you.
Adding, omitting, or changing information, ambiguities, or inaccuracies in the facts can change the tax result.
Based on the information provided, I assume that your parents do not intend to generate income from renting out property.
If your parents allow you to use the apartment free of charge (you only pay for utilities and maintenance costs), they do not generate income from renting out property, as there are no earnings, and the payments made by you offset the potential expenses of the parents (maintenance costs).
If a third party lives in the apartment, no fictitious rent is set. It is your parents' private matter to whom they allow the use of the apartment, as long as they do not receive rent for it. Even if the third party registers their residence there, this does not pose a problem.
If your parents intend to rent out the property, in order to claim a deduction for advertising costs, the apartment must not be rented out free of charge. According to the current legal situation since 01.01.2012, at least 66% of the local market rent must be agreed upon with family members in order to achieve the full deduction for advertising costs.
I hope this information has been helpful to you. If you have any further questions, please use the inquiry function.
Best regards,
Henriette Regulla
Attorney/ Tax Consultant/ Tax Advisor for Tax Law
