Allocation of preservation costs in case of sale
February 4, 2022 | 50,00 EUR | answered by Steuerberater Knut Christiansen
My brother and I each own 50% of a multi-family house. There are also a number of maintenance expenses that are spread out over several years. As of May 1, 2021, my brother sells his 50% share to a partnership consisting of my 3 children and myself. My 50% share remains with me.
How should the maintenance expenses be considered in the two tax returns from January 1 to April 30 and from May 1 to December 31, as well as in subsequent years? What are the possible options for structuring this transaction?
Good day and thank you for using ask-einen.com!
Regarding your question, I would like to provide the following answer.
In § 82b EStDV, paragraph 2 states:
"If the building is sold during the distribution period, the part of the maintenance expenses that has not yet been taken into account is to be deducted as advertising costs in the year of sale. The same applies if a building is transferred to business assets or is no longer used for income generation."
This would mean: your brother's share would then be fully deductible as advertising costs in the year of sale. Your share would continue until the end of the term.
Your children would then have their own acquisition costs regarding your brother's share and could depreciate this "new" share differently from the previous depreciation. So, there is an "old" depreciation for you and a "new" depreciation for your children.
There are possibilities for design in determining the purchase price shares for land and buildings. In the purchase agreement, the purchase price for the building share should be set as high as possible within a realistic framework to generate high depreciations for the children.
I hope this answers your question. If not, feel free to ask follow-up questions.
I would like to point out that this forum cannot replace a detailed and personal tax consultation, but is mainly intended to provide an initial tax assessment. The legal assessment of your request could differ by adding or omitting relevant information.
Best regards,
Knut Christiansen
Tax advisor
