Which costs can I deduct for tax purposes when renting out my property?
November 9, 2022 | 45,00 EUR | answered by Lorenzo Hartmann
Dear tax consultant,
My name is Katrin Siebert and I have recently started renting out a property. Unfortunately, I am unsure about which costs I can deduct for tax purposes and which I cannot. I hope you can help me with this.
The situation is as follows: a few months ago, I bought a condominium and now rent it out to tenants. This involves some costs, such as maintenance costs, management fees, utilities, and depreciation. I am wondering which of these costs I can claim for tax purposes and if there are any additional costs that I have not considered.
My main concern is to optimize my tax burden and take advantage of all possible tax benefits. I want to make sure that I do not overlook anything and report everything correctly on my tax return.
Therefore, my question to you is: which costs can I deduct for tax purposes when renting out my property? Are there any specific regulations or considerations I should be aware of? Which documents do I need to provide and how exactly do I need to substantiate the costs?
I would greatly appreciate it if you could provide me with detailed information on this so that I can properly and efficiently prepare my tax return in the future.
Thank you in advance for your support.
Best regards,
Katrin Siebert
Dear Mrs. Siebert,
Thank you for your inquiry and your interest in my tax advisory services. I am pleased to assist you with your questions regarding the tax deductibility of costs related to the rental of your property.
As a landlord, you can generally deduct various costs to optimize your tax burden. Deductible costs include maintenance costs, management fees, utility costs, and depreciation on your property.
Maintenance costs include expenses for the preservation and restoration of the rental property, such as repairs, renovations, or modernizations. These costs are usually fully deductible for tax purposes.
Management fees cover expenses for the administration and rental of the property, such as agent fees, costs for lease agreements, or accounting services. These costs are also typically tax-deductible.
Utility costs incurred by you as a landlord, such as property tax, insurance, waste disposal, or caretaker services, can also be claimed as deductible expenses.
Furthermore, you can deduct depreciation on your property for tax purposes. Depreciation reflects the decrease in value of your property over time and is also relevant for tax purposes.
However, there are some specific regulations and special considerations to keep in mind. For example, the costs of preparing an income-statement, which you as a landlord must prepare annually, should also be considered as deductible expenses.
To accurately report deductible costs in your tax return, it is important to keep all receipts and documents properly organized. This includes invoices, contracts, bank statements, and receipts for cash payments. Proper documentation is crucial to avoid potential inquiries from the tax authorities.
I recommend that you carefully collect and store all relevant documents in an orderly manner to efficiently prepare your tax return.
I hope this information helps you and addresses your questions regarding the tax deductibility of costs related to renting your property. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Lorenzo Hartmann
Tax Advisor
