Do I, as a landlord, have to pay value added tax on rental income?
July 12, 2024 | 40,00 EUR | answered by Lorenzo Hartmann
Dear tax advisor,
My name is Dora Lauer and I have some properties that I rent out. I have not paid any sales tax on the rental income so far, as my rental activity was considered to be exempt from sales tax. However, I have heard that the regulations may have changed and I am unsure whether I now have to pay sales tax on my rental income.
I am currently unsure whether I, as a landlord, have to pay sales tax on rental income and what consequences this could have for me. I am worried that I may have to pay back taxes or that my previous accounting may not have been correct.
Could you please explain to me whether I have to pay sales tax on rental income as a landlord and how I can find out if my rental activity is subject to sales tax? Are there ways to keep it exempt from sales tax or can I deduct the sales tax on my rental income for tax purposes?
Thank you in advance for your support.
Kind regards,
Dora Lauer
Dear Mrs. Lauer,
Thank you for your inquiry regarding the liability for value added tax in connection with your rental activity. It is understandable that you are unsure and concerned about whether you now have to pay VAT on your rental income. I will be happy to provide you with all the necessary information.
In general, the rental of real estate is exempt from value added tax if you, as the landlord, do not rent out more than a total of five apartments and do not provide any additional services beyond pure rental. In this case, your rental income is exempt from value added tax.
However, there are exceptions to this rule that must be considered. For example, furnished rentals or the rental of commercial spaces are generally subject to value added tax. The rental of vacation homes or renting to businesses can also lead to liability for value added tax.
To make sure whether your rental activity is subject to value added tax, you should carefully examine your rental activity. Check if you do not exceed the limit of five rented apartments and if you provide additional services that could lead to liability for value added tax. If you are unsure, I recommend consulting a tax advisor who can analyze your individual situation.
If it turns out that you have to pay value added tax on your rental income, you can usually claim it back as input tax. This means that you can deduct the paid value added tax from the value added tax you collect. This reduces your tax burden.
Overall, it is important that you regularly review your rental activity and make adjustments if necessary to avoid tax risks. If you have any further questions or would like a more detailed analysis of your situation, I am happy to assist.
Best regards,
Lorenzo Hartmann
