From what amount do I have to pay taxes on my rental income?
January 19, 2023 | 40,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Lucas Bacigalupo and I own a rented property in Frankfurt. Over the past few years, I have been generating regular rental income which I have not yet declared for tax purposes. I am now wondering at what point I need to start declaring my rental income and what tax implications I may face.
Currently, my monthly rental income is 1,500 euros, totaling an annual income of 18,000 euros. Aside from rental income, I do not have any other income from renting or leasing. My main concern is that I may have neglected my tax obligations and may now have to deal with back payments or other consequences.
Could you please clarify for me at what point rental income needs to be declared for tax purposes and what tax rates would apply in my case? Are there ways for me to manage my rental income in a tax-efficient manner to avoid potential tax liabilities? What steps do I need to take now to clarify my tax situation and potentially make back tax payments?
I thank you in advance for your assistance and look forward to your helpful information and advice.
Sincerely,
Lucas Bacigalupo
Dear Mr. Bacigalupo,
Thank you for your inquiry regarding the taxation of rental income from leased properties. It is important to be aware of your tax obligations to avoid unpleasant surprises. I would like to explain to you in more detail at what amount rental income must be taxed and what tax consequences you could face.
In general, rental income from leasing and renting out properties is subject to income tax. In your case, with a monthly rental income of 1,500 euros and an annual rent of 18,000 euros, you are already exceeding the tax-free basic allowance of currently 9,744 euros (for the year 2022). This means that you must declare and pay taxes on your rental income to the tax office.
The amount of tax depends on your individual tax rate, which is based on your total income. Since you have stated that you have no other income from leasing or renting out properties, your rental income will be taxed along with other income such as income from employment or capital gains. It is important to accurately report all income to ensure proper taxation.
To manage your rental income in a tax-efficient manner and avoid potential tax payments, I recommend that you carefully document your income and expenses. You can claim deductible expenses to reduce your tax burden. Deductible costs include maintenance and repair costs, management expenses, depreciations, and financing costs.
To clarify your tax situation and potentially make retroactive tax payments, I strongly advise you to consult with a tax advisor. A tax advisor can help you properly tax your rental income, take advantage of potential tax benefits, and avoid any additional tax payments. Together, you can work on a tax-optimized solution for your rental activity.
I hope that this information has been helpful to you. If you have any further questions or need assistance, I am at your disposal.
Sincerely,
Johann Lauer
