Tax office no longer recognizes lease agreement.
March 4, 2012 | 25,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello,
I have rented out the attic apartment of my own home to my parents. The tenancy has been in place since 01.01.1997 and was also recognized by the tax office.
Now, with the tax assessment for 2009, there was a surprise - the tax office no longer recognizes the tenancy, as losses of 60,000.00 euros would have been incurred over the entire duration of the tenancy.
My tax advisor has filed an objection against this, which is still being processed by the tax office's revision department.
For 2010, we have increased the rent by 50.00 euros per month, which according to the local rent index corresponds to the customary rent.
Since I have not yet received my tax assessment for 2010, I called the tax office. I was told that the tenancy for 2010 will not be recognized again, as the losses are likely to be around 2,200.00 euros and it is also unlikely that the objection for 2009 will be successful.
My questions are:
Shouldn't my tax advisor have noticed this imbalance in the rental agreement? (60,000.00 euros in losses over 13 years is insane!)
Do I have any chance of getting the tenancy recognized again given the amount involved?
Do you recommend changing tax advisors?
Thank you.
Dear Seeker,
Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your commitment in a preliminary consultation as follows:
In your case, there is a rental to close relatives.
If the tenancy is conducted as if with third parties, it is to be recognized. The following should generally be considered:
1. If the rent is less than 56% of the local rent, only the proportionate advertising costs are deductible. According to the judgment of the Federal Fiscal Court (BFH) from 22.07.2003 (BFH/NV 2003 p. 1493), the tax office may not examine the question of whether a total surplus is achieved with discounted rental to relatives if there is a proportionate reduction in advertising costs.
2. If the rent is between 56% and less than 75% of the local rent, losses will only be recognized if a total surplus can be proven based on a forecast.
3. For a rental of 75% or more of the local rent, losses will be recognized in full.
Your issue can only be definitively resolved after reviewing the documents. If you are interested in a review within the scope of a mandate, you can contact me at StillerCPA@gmx.de. However, I will only be available again in 3 days.
I hope I was able to assist you.
Kind regards,
Ulrich Stiller
Tax advisor / Diplom Business Economist
