Can I as a landlord optimize my rental income for tax purposes?
July 8, 2024 | 40,00 EUR | answered by Lilli Reuter
Dear tax lawyer,
I am Alwin Dietrich and have been renting out an apartment in my condominium for several years. So far, I have always declared my rental income properly in my tax return, but I am wondering if there are ways to optimize this from a tax perspective.
Currently, I am paying a high tax on my rental income and I am wondering if there are legal ways to reduce this. I have heard that there are depreciation options available to landlords. Can I also use these for my apartment to reduce my tax burden?
Furthermore, I am concerned that I may be overlooking tax benefits available to me as a landlord. Are there additional ways to optimize my rental income from a tax perspective? Should I, for example, carry out certain renovation or modernization works to gain tax advantages?
Could you please show me ways in which I can optimize my rental income from a tax perspective as a landlord? I would be very grateful for your expertise and advice on this matter.
Thank you in advance.
Sincerely,
Alwin Dietrich
Dear Mr. Dietrich,
Thank you for your inquiry regarding the tax optimization of your rental income as a landlord. It is indeed possible to utilize various legal options to reduce your tax burden and therefore optimize your rental income.
One of the most important ways to optimize taxes as a landlord is indeed through the depreciation of buildings. As a landlord, you can depreciate the acquisition or production costs of your rented building over its useful life. This depreciation is referred to as "AfA" (depreciation for wear and tear) and can significantly reduce your tax burden. It is important that you take advantage of the depreciation possibilities for your property to gain tax benefits.
Furthermore, renovation and modernization expenses can also be claimed for tax purposes. Costs for maintenance measures are usually deductible as operating expenses. So if you carry out certain renovations on your rented property to modernize or maintain it, you can claim these costs for tax purposes and further reduce your tax burden.
It is important that you carefully document all relevant expenses and costs related to your rented property in order to correctly report them in your tax return. Don't forget to also consider ancillary costs such as management fees, insurance, property tax, or electricity and water costs in your tax considerations.
Overall, there are various ways for landlords to optimize their rental income for tax purposes. I recommend that you consult with a tax advisor who can provide you with individual advice and concrete tips on how to reduce your tax burden as a landlord.
I hope this information was helpful to you and I am available for any further questions you may have.
Best regards,
Lilli Reuter
Tax lawyer
