Which expenses can I claim as tax deductions when renting out a property?
March 27, 2022 | 40,00 EUR | answered by Petra Höfer
Dear tax consultant,
My name is Verena Köhler and I recently rented out a property. Since this is my first rental, I am unsure about which expenses I can claim for tax purposes. I renovated the property to make it rentable, and had to incur some costs for craftsmen and materials. Additionally, there are monthly utility costs such as electricity, water, and waste disposal. I also took out a loan to finance the property.
I am concerned that I may have overlooked expenses that I could deduct for tax purposes. Are there specific expenses that I should definitely consider when renting out the property? Which costs are deductible and to what extent? Are there also expenses that I cannot deduct?
I would greatly appreciate your help and advice in order to better understand and optimize my tax situation regarding the rental. Thank you in advance for your support.
Sincerely,
Verena Köhler
Dear Mrs. Köhler,
Thank you for your inquiry and your trust in my expertise as a tax consultant. It is understandable that you are unsure about which expenses you can deduct for tax purposes, especially since this is your first rental property. I will be happy to assist you and provide you with an overview of deductible costs for rental properties.
First and foremost, it is important to know that generally all expenses directly related to the rental property are tax deductible. This includes costs for renovation and maintenance work, which you have already mentioned. This includes both the costs for craftsmen services and materials. Monthly utilities such as electricity, water, and waste disposal can also be claimed as deductible expenses.
Furthermore, you can deduct interest on the loan taken out to finance the property as advertising costs. Insurance premiums, property tax, management fees, broker fees, and any legal and advisory costs that may arise are also tax deductible. If you rent out the property furnished, you can also take depreciation on the furniture and equipment as well as building depreciation.
However, there are also expenses that are not tax deductible, such as private costs not directly related to the rental property. Additionally, cosmetic repairs that exceed the annual local market rent are not deductible. Costs for personal use, such as a garden or private garage, cannot be claimed for tax purposes.
It is advisable to carefully collect and keep all receipts and invoices to be able to present them to the tax office when needed. I am available for a detailed consultation and can assist you in correctly capturing all deductible costs and optimizing your tax situation.
I hope this information has been helpful to you. Please feel free to reach out to me if you have any further questions.
Best regards,
Petra Höfer, Tax Consultant
