What tax implications does renting vacation homes abroad have?
April 29, 2022 | 40,00 EUR | answered by Lorenzo Hartmann
Dear tax advisor,
My name is Nina Richter and I operate the rental of holiday homes abroad. So far, I have not delved deeply into the tax aspects of this activity and therefore have some questions about it.
Currently, I rent out several holiday homes in Spain and Portugal through various platforms such as Airbnb and Booking.com. I generate regular income from this, which I have not yet declared for tax purposes. I wonder what the tax implications of this income are and whether I have to pay taxes on it in Germany or in the respective country.
Furthermore, I am unsure whether I have to declare the rental income as commercial income or as income from renting and leasing. Are there differences in the tax treatment and which option is most advantageous for me as a holiday home landlord abroad?
Additionally, I am concerned about the tax deductibility of expenses such as maintenance costs, cleaning costs, and advertising costs related to the rental of the holiday homes. How can I claim these expenses for tax purposes and what documents do I need to provide for this?
I would greatly appreciate it if you could provide me with comprehensive information on the aforementioned tax issues. I would also be grateful for any possible solutions to fulfill my tax obligations related to the rental of holiday homes abroad.
Thank you in advance for your assistance.
Sincerely,
Nina Richter
Dear Mrs. Richter,
Thank you for your inquiry regarding the tax aspects of renting vacation homes abroad. As a tax advisor for rental properties, I am happy to assist you and answer your questions in detail.
Firstly, regarding the tax implications of the income from renting out your vacation homes in Spain and Portugal. In principle, this income must be taxed in Germany, as you are a resident in Germany and therefore have a tax obligation here. It is important that you declare and pay taxes on the income from renting out your vacation homes in your tax return.
In terms of classifying the rental income as business income or income from rental and leasing, there are indeed differences in the tax treatment. Business income is generated when the rental of the vacation homes has a certain business character, for example through regular and extensive rental activity or additional services for the tenants. Income from rental and leasing, on the other hand, is generated when the rental activity is not considered a commercial operation. In your case, as a landlord of vacation homes abroad, it is likely that the income will be treated as income from rental and leasing.
The tax deductibility of expenses such as maintenance costs, cleaning costs, and advertising costs related to the rental of the vacation homes is generally possible. These expenses can be claimed as advertising costs or operating expenses and thus reduce your taxable income. It is important that you collect receipts and invoices for these expenses and can present them in your tax return.
To fulfill your tax obligations related to renting vacation homes abroad, I recommend that you carefully document all income and expenses and regularly submit your tax return. A detailed breakdown of income and expenses as well as compliance with tax regulations are crucial to avoid potential tax disadvantages.
I hope that I was able to assist you with this information and am available for any further questions. Thank you for your trust and inquiry.
Sincerely,
Lorenzo Hartmann
