What do I need to consider when it comes to taxing rental income from an inheritance community?
September 9, 2022 | 40,00 EUR | answered by Petra Höfer
Dear tax consultant,
My name is Rolf Fischer and I am part of an inheritance community that rents out a property. In the past, we have divided the rental income among ourselves and also paid taxes accordingly. Now I am wondering if we have done everything correctly and if there may be tax pitfalls that we need to be aware of.
The situation is as follows: The property has been successfully rented out for several years and the rental income regularly flows into the account of the inheritance community. We have so far divided the income among ourselves and reported it in our respective tax returns. However, I am not sure if this is the correct procedure and if we may be missing out on potential tax benefits.
My concern is that we may have made tax mistakes that could lead to additional payments or other unpleasant consequences. I also wonder if there may be better ways to tax the rental income and if we should consider a different distribution of the income, for example.
My question to you as a tax consultant is therefore: What do I need to consider when taxing rental income from an inheritance community? Are there any specific regulations or requirements that we should take into account? What tax optimization options are available in our case and what specific steps should we take to optimize the taxation of rental income?
Thank you in advance for your help and support.
Sincerely,
Rolf Fischer
Dear Mr. Fischer,
Thank you for your inquiry regarding the taxation of rental income from an inheritance community. It is important that you inform yourself about the tax aspects and ensure that you handle everything correctly to avoid any potential tax pitfalls.
First of all, it is positive to hear that you have regularly divided the rental income from the rented property among the members of the inheritance community and taxed it accordingly. This is generally the right approach, as income from renting and leasing is generally to be taxed as income from renting and leasing in accordance with § 21 EStG.
However, there are some specific regulations and rules that you should consider when taxing rental income from an inheritance community. In an inheritance community, the income is generally divided among the individual heirs according to their inheritance shares. This means that the rental income belongs to each heir according to their inheritance share and must be taxed by them.
It is important to determine the inheritance share correctly and to declare the income from renting and leasing in the tax return of each heir accordingly. Otherwise, there may be tax problems, such as additional payments or even a tax audit by the tax office.
Regarding tax optimization possibilities, there are different approaches that you can consider. For example, it might be advisable to consider a different distribution of the rental income in order to achieve tax benefits. Choosing the right depreciation method and considering deductible expenses can also have a positive impact on the tax burden.
To optimize the taxation of rental income, I recommend that you consult with a tax advisor who is familiar with the taxation of rental income from inheritance communities. Together, you can analyze your individual situation and identify possible tax advantages.
I hope that this information has been helpful to you and I am available for any further questions you may have.
Best regards,
Petra Höfer
Tax advisor
