What tax benefits are there when purchasing a rented property?
July 18, 2023 | 50,00 EUR | answered by Tatiana Seiler
Dear tax consultant,
My name is Renata Müller and I am interested in purchasing a rented property. I am on the verge of acquiring an apartment or a house as an investment and would like to learn more about the tax benefits that could arise from buying a rented property.
Currently, I am employed and earn an average income. My goal is to generate additional income through renting out a property and benefit from tax advantages in the long term.
My concerns mainly lie in the fact that I am not exactly sure what tax aspects to consider when purchasing a rented property. I wonder if it is possible to deduct rental income from taxes and what depreciation I can claim.
Could you please specify what tax benefits there are when buying a rented property? Are there ways to save on taxes or utilize certain tax reliefs? I would greatly appreciate it if you could also highlight any potential risks or pitfalls that I should be aware of in property taxation.
Thank you in advance for your support and expert advice.
Sincerely,
Renata Müller
Dear Mrs. Müller,
Thank you for your inquiry regarding the tax benefits of purchasing a rented property. As a tax consultant specializing in real estate taxation, I can provide you with more information on this topic.
When purchasing a rented property, there are various tax advantages that can benefit you as an investor. One of the most important points is the ability to deduct rental income for tax purposes. This means that the income from renting out the property is taxed as income from renting and leasing. Various operating expenses, such as maintenance costs or management fees, can also be deducted from the rental income to reduce the tax burden.
Another important point is the depreciation options for rented properties. Through linear depreciation, you can deduct the acquisition costs of the property over a period of 50 years for tax purposes. This means that you can deduct a certain percentage of the acquisition costs as depreciation from the taxable income each year. This reduces your tax burden and allows you to save on taxes.
Additionally, there are opportunities to take advantage of certain tax reliefs, such as the ability to deduct advertising expenses for tax purposes. This includes costs related to financing the property, such as loan interest or credit fees.
However, when it comes to real estate taxation, it is important to also consider potential risks and pitfalls. Risks may include incorrect calculation of depreciation, which could lead to tax payments, or inadequate documentation of operating expenses, which could lead to issues with the tax authorities. It is advisable to seek comprehensive advice before purchasing a rented property to avoid potential risks.
Overall, purchasing a rented property offers many tax benefits that allow you to save on taxes and benefit from additional income in the long term. Feel free to contact me for further questions or for a personal consultation.
Sincerely,
Tatiana Seiler
