What depreciation options are available for rental properties?
April 28, 2022 | 40,00 EUR | answered by Lorenzo Hartmann
Dear tax advisor,
My name is Ludwig Vöss and I have been a proud owner of a rented property for several years. In recent months, I have been thinking more about the depreciation possibilities for rented properties and wonder if I may have overlooked something here.
Currently, my rented property is in good condition and is regularly occupied by tenants. I generate regular income from it, but I would like to learn more about the tax options for depreciation of rented properties.
My concerns are that I may not fully utilize all depreciation possibilities and therefore incur unnecessary tax burdens. I want to ensure that I use all legal depreciation options to minimize my tax burden and optimize my financial situation.
Therefore, my specific question to you is: What are the depreciation possibilities for rented properties and what steps do I need to take to fully take advantage of them? Are there any special rules or requirements that I should be aware of? I would appreciate a detailed explanation on this topic to best manage my financial situation.
Thank you in advance for your support.
Sincerely,
Ludwig Vöss
Dear Mr. Vöss,
Thank you for your inquiry and your interest in the depreciation options for rental properties. As a tax consultant specializing in rental properties, I can help you and provide an overview of the relevant regulations.
For rental properties, there is the possibility to depreciate the acquisition or production costs over the useful life of the property. This depreciation is also known as linear depreciation (AfA). The usual useful life of a property is 40 years. This means that you can claim 2.5% of the acquisition or production costs as a tax deduction annually.
In addition to linear depreciation, there is also the option of accelerated depreciation, where higher depreciation can be claimed in the early years compared to later years. However, this depreciation method can only be used for buildings constructed before December 31, 1924.
To fully take advantage of the depreciation options, it is important to accurately determine and document the acquisition or production costs of your property. This includes not only the purchase price of the property, but also any additional costs such as property transfer tax, real estate agent fees, notary fees, renovation and modernization costs. These costs can also be considered in the depreciation.
It is also important to correctly report the depreciations in your tax return and fill out the necessary forms. A tax consultant can assist you in ensuring that all depreciation options are fully utilized and no tax benefits are missed.
In addition to depreciation options, there are other tax aspects to consider for rental properties, such as the tax treatment of rental income, deductible expenses, or possible special depreciation.
I hope that this information was helpful to you and I am available for further questions. Thank you for your trust and your inquiry.
Sincerely,
Lorenzo Hartmann
