What do I need to consider when reporting rental income and leasing in my tax return?
August 5, 2023 | 40,00 EUR | answered by Wolfgang Lenzner
Dear tax advisor,
my name is Leonie Höfer and I have a question regarding the rental and leasing income in my tax return. I recently bought a property and now rent it out. I have never declared rental and leasing income in my tax return before and am therefore unsure about what I need to consider.
Currently, I am unsure about which expenses I can claim for tax purposes and which income I need to report. I am also unsure about which forms to fill out and which deadlines to meet. Furthermore, I am wondering if I can also depreciate the property and how this will be treated for tax purposes.
I am worried that I might make mistakes and therefore incur tax disadvantages. Therefore, it would be very helpful for me if you could explain to me what I need to consider when reporting rental and leasing income in my tax return. Are there any specific regulations that I should be aware of? How can I ensure that I provide all relevant information correctly?
Thank you in advance for your assistance.
Best regards,
Leonie Höfer
Dear Ms. Höfer,
Thank you for your question regarding the tax treatment of rental income in your tax return. As a tax advisor, I would like to help you and provide you with all the necessary information.
First of all, it is important to know that income from rental and leasing must be reported in section V of your tax return. Here, you can declare both the rental income and the deductible expenses for your rented property.
Deductible expenses include depreciation for the property, interest on loans used to finance the property, maintenance and repair costs, management fees, property tax, and insurance premiums. These expenses reduce your taxable rental income.
Depreciation for the property can be claimed over a period of 50 years. The purchase price of the property is spread over the useful life and claimed as depreciation annually. These depreciations also reduce your taxable income.
It is important that you collect and keep all relevant documents and receipts for your income and expenses. These will be required in case of a tax audit. The deadline for filing the tax return for the respective calendar year is usually on July 31 of the following year. If you hire a tax advisor, you can request an extension of this deadline.
There are also specific regulations that you should consider, such as the rules regarding VAT liability for rental and leasing. It is important to comply with the turnover thresholds and, if necessary, remit VAT.
To ensure that you provide all relevant information accurately, I recommend seeking advice from a tax advisor. A tax advisor can help you correctly capture all the tax aspects of your rental property and avoid potential errors.
I hope that this information was helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Wolfgang Lenzner
