Can I deduct the renovation costs of my rented property from my taxes?
December 11, 2023 | 40,00 EUR | answered by Petra Höfer
Dear tax advisor,
my name is Katrin Raab and I rent out a property in the city center of Munich. This year, I have carried out extensive renovation work on the property to make it more attractive to potential tenants. The costs for the renovation amount to a total of 15,000 euros.
Now, I am wondering if I can deduct the renovation costs from my taxes. I am concerned that I will have to pay high taxes at the end of the year if I cannot claim the costs. Are there ways to include the renovation costs in my tax return and reduce my tax burden?
I have already tried to gather information on this topic online, but I have come across conflicting information. Some sources say that renovation costs are deductible as advertising expenses, while others claim the opposite.
Can you please help me and tell me if and to what extent I can deduct the renovation costs of my rented property from my taxes? If so, what documents do I need and how should I proceed to correctly declare the costs?
Thank you in advance for your assistance.
Sincerely,
Katrin Raab
Dear Mrs. Raab,
thank you for your inquiry regarding the tax deductibility of renovation costs for a rented property. I understand that you are concerned about your tax burden and would like clarity on this matter.
In general, renovation costs for rented properties can be claimed as tax-deductible expenses. These are considered advertising costs that can be deducted within the framework of rental and leasing income. The renovation costs are depreciated over the useful life of the building, which means over a period of several years.
The renovation costs of 15,000 euros cannot be fully deducted as advertising costs immediately, but must be spread over the useful life of the property. The exact depreciation period depends on the type of renovation. Typically, a renovation is depreciated over a period of 10 years. This means that you can claim 1/10 of the renovation costs as advertising expenses each year.
To correctly report the renovation costs, you will need the invoices and receipts for the work done. These should be itemized in detail so that the tax office can understand exactly what costs were incurred. You should also ensure that the renovation is actually for the maintenance and modernization of the property and not just considered cosmetic repairs.
In your tax return, you can then enter the renovation costs in the appropriate field for advertising expenses for rental and leasing. It is advisable to seek assistance from a tax advisor to ensure that all information is correct and complete.
I hope this information helps you and provides clarity regarding the tax deductibility of renovation costs. If you have any further questions or need assistance, I am happy to help.
Best regards,
Petra Höfer
