Taxation of residential property in Germany. Living in Switzerland.
November 25, 2013 | 30,00 EUR | answered by StB Patrick Färber
Dear Sir or Madam,
I have a question regarding taxes in Germany. I have been living in Switzerland for 2 years and recently purchased a property in Germany. I am completely de-registered in Germany.
1. What percentage do I have to pay taxes on rental income?
2. Is there a tax-free allowance?
3. What can I deduct?
4. Is filing taxes complicated? Is there an explanation of how to do it or do I need to hire a tax advisor?
5. Are there any tips or tricks to avoid taxation or pay less?
The annual rental income amounts to approximately 4000 euros. It is a small property.
Thank you and kind regards.
Dear questioner,
I can answer your inquiry in accordance with the rules of the forum and based on the information you provided as follows:
If you had no ties to Germany since moving to Switzerland, such as family and children, then you will be considered "limited tax liable" in Germany (limited meaning limited to income from domestic sources).
Taxation will be based on the progressive income tax rate, meaning that a statement cannot be made solely on the basis of rental income. However, it should be noted that as a limited tax liable individual, you do not have a basic tax allowance of approximately EUR 8,000 or 16,000 (if you were married). Therefore, you will be taxed on your rental income from the first euro.
Regarding deductible expenses in the context of property rental, all commonly associated expenses can be considered, such as loan interest, property tax, as well as advance payments for house or condominium fees (if applicable). You can also claim "depreciation": purchase price of the BUILDING (not for the proportional land), at a rate of 2% per year. Your rental income includes the warm rent, all recoverable additional costs are deductible expenses (non-recoverable costs remain with you).
Whether the explanation is "complicated" is a matter of debate! In any case, you should use the form ESt1C (limited tax liable individuals) for your tax return. You will only find a "guide" if you purchase tax software in Germany, for example. Perhaps you could consider consulting a tax advisor for your very first tax return, who can provide you with the basics? You can continue this process in subsequent years.
There are no tips and tricks for AVOIDANCE in your case. You do not have many options for tax planning, you just need to ensure that you claim all possible deductible expenses.
I hope this gives you an overview!
Best regards,
P. Färber
