Which costs can be claimed as tax deductible when renting out real estate?
May 15, 2023 | 40,00 EUR | answered by Johann Lauer
Dear tax consultant,
My name is Eiko Höfer and I have been renting out several properties for several years. So far, I have been deducting the costs for repairs, maintenance, and insurance from my taxes. However, recently I have been wondering if there are possibly more expenses I can deduct to minimize my tax burden.
My current situation is as follows: I rent out a total of three apartments and one commercial property. The apartments are in good condition, but there are regular small repairs needed. The commercial property is leased to a company that uses office space there. I also pay insurance premiums for all properties.
My concerns are that I may be overlooking costs that are tax deductible and could therefore reduce my tax burden. I want to make sure I am maximizing all opportunities to increase my rental income.
That is why I am asking you: What costs can be deducted for renting out properties? Are there perhaps other expenses that I have not considered so far? I would greatly appreciate it if you could provide me with a comprehensive overview of deductible costs to help me plan my finances optimally.
Thank you in advance for your assistance.
Kind regards,
Eiko Höfer
Dear Mr. Höfer,
Thank you for your inquiry regarding tax-deductible costs in the rental of properties. It is understandable that you are concerned about how to minimize your tax burden and maximize your rental income. In fact, there are a variety of costs that can be claimed as tax deductions in the rental of properties. Below, I will provide you with a comprehensive overview of these deductible costs.
Some of the key deductible costs in the rental of properties include:
1. Repairs and maintenance: Costs for repairs and maintenance on the rented properties can be fully claimed as deductible expenses. This includes both major renovation work and minor repairs.
2. Insurance premiums: The costs of insurance such as building insurance, liability insurance, or loss of rent insurance can also be claimed as tax deductions.
3. Management costs: Costs for the management of rented properties, such as hiring a property manager or accounting fees, can be claimed as deductible expenses.
4. Financing costs: Interest on loans taken out to finance the rented properties is also tax deductible.
5. Advertising costs: Costs for rental advertising, such as placing ads or creating brochures, can be claimed as deductible expenses.
6. Property tax and waste disposal: The costs of property tax and waste disposal can also be claimed as tax deductions.
It is important to note that deductible costs in the rental of properties may vary individually and depend on the specific circumstances of your rental activity. Therefore, I recommend that you seek individual advice from a tax advisor to ensure that you claim all relevant costs as tax deductions.
I hope this overview helps you in planning your finances optimally. If you have any further questions or require personalized advice, I am happy to assist.
Best regards,
Johann Lauer, Tax Advisor
