Which expenses can I deduct when renting out real estate?
July 31, 2023 | 40,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Lucas Lippert and I have recently become a landlord of a property. I have been renting out this apartment for a few months and so far things are going quite well. However, I do not have much experience with property rental and I am unsure about which expenses I can claim for tax purposes.
I have carried out some renovation work in the apartment to bring it into a good condition. This has incurred costs, but I am not sure if I can deduct these expenses for tax purposes. Additionally, I have monthly expenses such as insurance, utilities, and maintenance costs.
I am worried that I may be doing something wrong and end up paying more taxes than necessary. Therefore, I would like to know which expenses I can claim for tax purposes when renting out properties. Are there specific requirements that I must meet? And how can I ensure that I consider all relevant costs to minimize my tax burden?
I would appreciate it if you could help me get an overview of deductible expenses when renting out properties and provide me with possible solutions.
Thank you in advance.
Sincerely,
Lucas Lippert
Dear Mr. Lippert,
Thank you for your inquiry regarding tax-deductible expenses when renting out properties. As a tax advisor specializing in rental properties, I am happy to help you and provide you with an overview of the relevant costs that you can claim for tax purposes.
First and foremost, it is important to know that as a landlord, you can generally deduct all costs that are directly related to the rental of your property. This includes costs for renovations, maintenance, insurance, utilities, and management fees. Depreciation of the acquisition costs of the property itself is also tax-deductible.
The renovations you have carried out in your apartment can generally be claimed as advertising costs. It is important to note that you can deduct the costs for maintenance and modernization measures immediately in full, while the costs for so-called "production expenses" must be spread over the useful life through depreciation.
Monthly expenses such as insurance, utilities, and maintenance costs can also be claimed as advertising costs for tax purposes. However, it is important to keep all receipts and invoices carefully and document them properly in order to be able to prove in case of a tax audit that the expenses were actually incurred.
To ensure that you consider all relevant costs and minimize your tax burden, I recommend that you consult with an experienced tax advisor. A tax advisor can help you identify all tax-deductible expenses and make possible tax optimizations.
I hope this information is helpful to you and I am available if you have any further questions. Thank you for your trust and I wish you continued success in renting out your property.
Best regards,
Johann Lauer
