How does the deductibility of craftsman services work?
August 15, 2023 | 40,00 EUR | answered by Quentin Reuter
Dear tax advisor,
My name is Clara Lange and I am unsure about how the deductibility of craftsman services works. In my current situation, I have had some renovation work done in my house and would like to know if I can claim the costs for tax purposes.
I recently renovated my house as some repairs and modernizations were necessary. I hired various craftsmen to, among other things, renew the electrical wiring, install the heating, and renovate the bathroom. I have the invoices for the work done.
Now I am wondering if and how I can deduct the costs for the craftsman services from my taxes. I would like to take advantage of all possibilities to optimize my tax burden and not overlook any potential savings.
Could you please explain to me how the deductibility of craftsman services works exactly? What requirements must be met in order for me to include the costs in my tax return? Are there any specific maximum limits or restrictions that I need to be aware of?
I would greatly appreciate your expert advice and assistance in order to clarify this matter and correctly fill out my tax return.
Thank you in advance for your help.
Sincerely,
Clara Lange
Dear Mrs. Lange,
Thank you for your inquiry regarding the deductibility of craftsman services in your tax return. It is important to take advantage of all possibilities to optimize your tax burden, so it is good that you are informing yourself about this topic.
In general, craftsman services can be claimed in your tax return as household-related services. This includes work carried out in your own household or on your own property, such as renovation work, repairs, and modernizations. The costs for the labor as well as for travel, materials, and machinery can be included in your tax return.
However, certain conditions must be met for the craftsman services to be deductible. Firstly, the work must have actually been carried out in your own household or on your own property. It is not sufficient, for example, if you want to deduct work done in a rental apartment or a holiday home.
Furthermore, the craftsman services must have been paid in cash or by bank transfer to the craftsman's account. Therefore, you should make sure to keep the invoices from the craftsmen and be able to provide proof of payment.
There are also certain maximum limits that you must consider. You can deduct a maximum of 20% of the labor costs and up to 4,000 euros per year. This means that you can deduct a maximum of 800 euros per year from your taxes. If you are married or have children, higher maximum amounts apply.
It is important to keep the invoices and payment receipts carefully and report them in your tax return. If you are unsure whether certain work qualifies as household-related services, you can contact me and I will assist you with the correct classification.
I hope this information has been helpful to you. If you have any further questions or need assistance, please feel free to contact me.
Sincerely,
Quentin Reuter
