Renting out ownership shares to co-owners.
March 4, 2012 | 35,00 EUR | answered by Dr. Yanqiong Bolik
Facts:
My wife and I, as well as my parents, have purchased the property with a single-family house in which my parents have been living as tenants for a long time.
Each person is now registered in the land register for a quarter.
There are two loans.
Question:
Can I rent out the 50% of the house that belongs to me and my wife to my parents (in order to deduct my share of the interest, court, and notary costs)?
We would then enter into a lease agreement for 75% of the local rent (the amount my parents paid when they were still tenants).
Dear inquirer,
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 information can change the tax result.
According to your information, you, your wife, and your parents form a property community. The single-family house (SFH) is jointly owned by the property community. Your parents use the SFH beyond their share of ownership. If the property community represents itself as the landlord to the outside world, thus jointly fulfilling the objective requirements of § 21 para. 1 sentence 1 no. 1 EStG, and if the lease agreement between the property community and your parents passes the arm's length test, the community generates income from renting and leasing, which is to be determined jointly and separately. This means that advertising costs are first taken into account in determining the joint profits. Joint income is attributed to the co-owners according to their respective ownership shares. You and your wife should report your share of the income in your tax return. Your parents' shares of the income are not tax deductible for them.
I hope I could assist you.
If you still have any uncertainties, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: info@zdbz.de
www.steuerberatung.zdbz.de
