Security exchange for a new apartment - is this permissible?
October 8, 2012 | 30,00 EUR | answered by Wirtschaftsprüfer André Hintz
Apartment W1 with loan K1 (interest rate 5%) is rented out
- purchased in 2000, refinanced in 2010
- will now be used for own use
Apartment W2 is to be purchased.
- will be rented out
Current interest rate for new loan K2: 3%
Remaining debt of K1 corresponds to refinancing for W2
What is certain:
Continue with W1 and K1. Refinance W2 with K2.
However, is the following also possible?:
- Exchange of collateral, i.e. W2 with loan K1 through collateral exchange
- New loan for W1 for own use with higher repayment.
Goal: Expensive loan (i.e. higher interest rate) should continue to be used for rented apartment due to deductibility of interest. However, the rented apartment is now a different one.
Cheaper loan for self-used apartment with special repayment.
Possibly also rent out both apartments for about 2 years, then use W2 for own use.
In other words: the deductible loan remains the same, the assigned rented apartment changes.
Is something like this possible?
Could the tax office have a problem with this?
Dear inquirer,
I would like to answer your question within the scope of an initial consultation and based on your fee commitment, along with the rules of the online portal. My response relates to the situation you have described.
Loan number 1 was assigned to apartment number 1. As the intended use of the apartment changes, the purpose of the loan also changes accordingly. If you now use the apartment for private purposes, the interest is no longer tax-deductible.
You cannot assign the loan to the newly acquired apartment number 2 and claim the higher interest as a deduction. This approach would not be recognized by the tax authorities.
Even if you initially rent out both apartments, the loans remain assigned as originally designated. Therefore, if there is a later change in the use of one of the apartments, the loan assigned to that apartment will be subject to this change in use.
I hope my explanations have been helpful to you and remain
Yours sincerely,
André Hintz
Tax Consultant
taxconsulting@andrehintz.de
