What are the tax consequences if I partially use my property myself and partially rent it out?
March 9, 2022 | 45,00 EUR | answered by Lucas Krebs
Dear tax advisor,
My name is Artur Niemeyer and I am the owner of a property that I partly use myself and partly rent out. Currently, I live in one part of the house myself while renting out the other part. Now I am thinking about the tax consequences of this situation and wondering if I may be at a tax disadvantage.
So, my situation is as follows: I use one part of my property myself and rent out another part, generating rental income that I need to declare for tax purposes. At the same time, there are also costs for the maintenance and management of the property that I would like to claim as tax deductions.
My concern is that I may have tax disadvantages due to the combination of personal use and rental. I am wondering if I am correctly reporting the rental income and associated costs in my tax return and how I can avoid any potential tax pitfalls.
Could you please explain to me what the tax consequences are when I partially use and partially rent out my property? Are there any special regulations or tax exemptions that I need to consider in this context? How can I ensure that I am optimally benefiting from my property in terms of taxes?
Thank you in advance for your assistance.
Kind regards,
Artur Niemeyer
Dear Mr. Niemeyer,
Thank you for your inquiry regarding the tax implications of your real estate situation, in which you use a part of your property yourself and rent out another part. This situation can indeed lead to specific tax questions that need to be taken into account.
First and foremost, it is important to understand the distinction between renting out and using your property for personal use. The rental income you earn from renting out your property is generally taxable and must be reported in your tax return. At the same time, you can also deduct the costs for the maintenance and management of the rented property as advertising expenses to reduce your tax burden.
If you use a part of your property yourself, you cannot deduct the so-called "personal use costs" for tax purposes. These include costs for your own living needs, such as electricity, water, heating, or repairs that exclusively serve your own use. Only costs directly related to the rental can be deducted for tax purposes.
However, there are also certain regulations and allowances that you should consider in your situation. For example, under certain conditions, you can generate a so-called "excess of income over advertising expenses" that remains tax-free. This is a tax-free allowance for landlords aimed at reducing the tax burden.
To ensure that you benefit optimally from your property in terms of taxes, I recommend carefully documenting all relevant costs and income and reporting them accurately in your tax return. If you are unsure about which costs are deductible and which are not, feel free to consult a tax advisor who can help you avoid tax pitfalls and optimize your tax situation.
I hope this information is helpful to you and I am available for any further questions you may have.
Best regards,
Lucas Krebs
