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Who has to pay taxes on rental income from joint ownership?

January 5, 2021 | 50,00 EUR | answered by Steuerberater Knut Christiansen

Hello,
first of all, happy new year.

I have a question regarding income from rental properties.

I own a house together with my mother. This house comes from my grandparents and I inherited part of it after the death of my father.

The house has been rented out and taxed under my mother's name so far. The rental agreement lasted 36 years until November 2020. Since then, it has been vacant.

After this time, the house is in need of renovation and I will take on the renovation and associated costs. Once the work is completed - estimated to be around mid-year - I plan to rent it out. I will enter into the rental agreement and receive and declare the income myself.

Now to the questions:

1.) I understand that the economic owner must declare the income. In my opinion, this would be me. Or do I have to declare it as a GbR with a unified and separate profit determination? Both of us are registered in the land register, but the rental agreement will be under my name.

2.) So far, the house has been taxed at the local tax office, but my tax office is different. How do I take over, for example, the depreciation? Will the last value be carried over?

3.) If 1 applies and I declare the income alone, can I already claim the costs incurred in December if I promise the rental income to the tax office? Or are there any issues because the house has been taxed by a different tax office so far? Perhaps a contract where my mother transfers the economic ownership to me?

Thank you for your response. If the amount paid is not sufficient, I am willing to pay more. The response can be written in a technical manner, I am not a layperson in this area, I am just unsure.

Steuerberater Knut Christiansen

Good evening and thank you for using frag-einen.com!

I am happy to answer your questions as part of an initial consultation.

1) Rental income is attributable to the person acting as the landlord. Therefore, the income would be taxable for you, unless your mother is the landlord. However, all rental income would still need to be received by you.

2) Since you are only attributed 50% ownership of the house, you can only claim 50% of the depreciation. You will need to pay taxes on the income through your local tax office. The depreciation will continue as usual, as you received the house for free and there was no separate purchase process.

3) In principle, you can already declare the costs as anticipated advertising expenses. You would need to convince the tax office that you will generate rental income in the future. It would be helpful if your mother confirms that she is transferring the house to you for rental purposes at no cost.

I hope this answers your questions. Please let me know if anything remains unclear.

Please note that this forum cannot replace personalized advice.

Best regards,

Knut Christiansen
Tax advisor