Renting to relatives as recipients of ALG II (Hartz 4)
January 31, 2011 | 25,00 EUR | answered by Michael Herrmann
I am renting out a 86 m² apartment to family members. The family members receive 247.50 EUR per month from the job center (benefits according to SGB II, Hartz 4) for this purpose. This amount is transferred directly to me by the job center. This amount is the total rent. I have entered this amount in Annex V (12 x 247.50 = 2,970 EUR). Additional costs were not separately stated.
The tax office is now of the opinion that the advertising costs for this apartment should be reduced because 247.50 EUR for rent are calculated too low. The customary cold rent in my region is about 3 - 4 EUR per m². Therefore, I do not reach the required 56% of the customary rent.
The argument that the apartment was provided at a reduced rate because it is for family members does not help me with the tax office, as they adhere to the mentioned 56%. The argument that the job center does not pay more and therefore I cannot receive more also does not work.
I am now required to revise and resubmit my Annex V. Is there a specific tax model that I can apply here where my advertising costs will be recognized? Unfortunately, the tax office cannot provide me with advisory information on this.
Thank you!
Dear inquirer,
first of all, thank you very much for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response will be based on the circumstances described. Missing or incorrect information about the actual conditions can affect the legal outcome.
A discounted rental exists when the agreed rent is lower compared to the local market rent. This means, in principle, that the expenses for the rented apartment can only be deducted proportionally as advertising costs, based on the ratio of the agreed rent to the local market rent.
If the agreed rent is less than 56% of the local market rent, the use transfer must be divided into a paid and an unpaid part. The expenses can only be deducted as advertising costs in accordance with the paid part (§ 21 para. 2 EStG).
Therefore, the tax office only assesses the situation of the discounted transfer. The reasons for this are irrelevant. Renting to relatives complicates the situation rather than supporting your argument, as stricter standards are applied to family contracts. Therefore, no preferential treatment can be derived from the circumstances. In fact, the intention to generate income could even be questioned, and any potential loss may not be recognized.
It would be more advisable to agree on a more appropriate rent with the housing authority (ARGE) and perhaps exceed 56% of the local rent. This would be a recognized tax-saving model.
I hope that these explanations have provided you with sufficient insight into the situation within the scope of your inquiry and initial consultation, and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
