Purchase of a single-family house with a granny flat (to rent out as a vacation rental?!)
April 14, 2012 | 35,00 EUR | answered by Dr. Yanqiong Bolik
We are going to buy a single-family house and live in it ourselves. On the ground floor (sloping location) there is a separate living unit with 2 rooms, a kitchen and a bathroom, which could also be rented out. The idea is to offer this as a holiday apartment.
What should we pay attention to in terms of the notarial contract, financing, and the tax office?
1. Should the purchase price for these rooms be listed separately in the notarial contract - so two prices, one for the self-used area and one for the intended holiday apartment? Is there a difference compared to "full" rental?
2. Should the financing also be separated for the self-used area and the holiday apartment?
3. Is registration with the tax office necessary because of VAT? Are you considered a business owner for a holiday apartment compared to a normal full rental?
Have we overlooked anything?
The house will be purchased by me and my spouse 50/50 - I am employed and my spouse is a homemaker with a part-time job.
Thank you!
Dear questioner,
Thank you for your inquiry, which I am happy to answer taking into consideration your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of the information can change the tax result.
Based on your description, you intend to generate income from renting out the granny flat. Expenses for the acquisition, security, and maintenance of the granny flat are deductible as advertising costs.
1) The purchase price does not necessarily have to be divided in the notarial contract. If only a total price for the property is agreed upon in the notarial contract, the tax administration usually allocates this purchase price according to the ratio of the area between the rented apartment and the area used for personal residential purposes. However, it is often advantageous if purchase prices for both parts of the property are separately agreed upon in the notarial contract. This ensures clarity when calculating advertising costs. Because only the depreciation of acquisition costs for the granny flat is considered advertising costs. Please note that the purchase price allocation should correspond to market price ratios. Otherwise, the tax administration may not recognize the allocation of the purchase price.
2) It is also recommended to separate the financing for the granny flat and other areas. Especially if you want to use your equity entirely for the self-used residential area and want to finance the granny flat entirely with a loan. In this case, the payment of the purchase price should be made from different accounts.
3) I assume that you are offering the holiday apartment for short-term accommodation of strangers. Revenues are generally subject to sales tax. You are obliged to register with the tax office to carry out this activity. Landlords are generally considered entrepreneurs according to § 2 UStG. However, long-term property rental according to § 4 No. 12 UStG is exempt from sales tax.
To avoid difficulties in deducting advertising costs, it is advisable to make a clear allocation of all expenses.
I hope I could assist you.
If there are still uncertainties, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax advisor
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: info@zdbz.de
www.steuerberatung.zdbz.de
