How are revenues from the rental of parking spaces treated for tax purposes?
April 20, 2024 | 40,00 EUR | answered by Lorenzo Hartmann
Dear Tax Advisor,
My name is Phillip Schlüter and I have been renting out several parking spaces in an underground garage for some time now. So far, I have not delved deeply into the tax treatment of these earnings and I am therefore somewhat unsure about how to correctly declare them in my tax return.
Currently, I am not sure whether the earnings from the rental of the parking spaces should be treated as commercial income or as income from renting and leasing. I want to make sure that I do not make any tax mistakes and also do not pay unnecessary taxes.
My concerns mainly lie in the fact that I am not sure which expenses I can deduct for tax purposes and whether I also have to pay sales tax on the rental income. Additionally, I would like to know if as a parking space landlord, I can make certain depreciation deductions and how best to include them in my tax return.
Could you please explain to me in detail how earnings from the rental of parking spaces are treated for tax purposes and what tax aspects I as a landlord need to consider? I would be very grateful for your support and guidance on this matter.
Sincerely,
Phillip Schlüter
Dear Mr. Schlüter,
Thank you for your inquiry regarding the tax treatment of income from renting parking spaces in an underground garage. I would be happy to explain to you in detail how this income is treated for tax purposes and what tax aspects you, as the landlord, need to consider.
Firstly, it is important to determine whether the rental of the parking spaces should be classified as business income or income from rental and leasing. In your case, if you are only renting out parking spaces and not providing any additional services, it is usually considered income from rental and leasing. This income is subject to income tax and should be reported in Annex V of your tax return.
Generally, there is no VAT on the rental of parking spaces as it is considered VAT-exempt rental income. This means that you do not have to charge and remit VAT on the rental income. However, you also cannot claim input VAT.
Regarding deductible expenses, you can claim costs for repairs, maintenance, insurance, property tax, waste disposal, management fees, and advertising as deductible expenses. Interest on loans taken out for the acquisition or maintenance of the parking spaces can also be deducted.
Furthermore, as the landlord of parking spaces, you can make certain depreciations. The acquisition costs of the parking spaces can be depreciated over their useful life. You can choose either the straight-line depreciation method, where the acquisition costs are evenly spread over the useful life, or the declining balance method, where higher depreciations are made in the initial years.
In your tax return, you should enter the rental income, deductible expenses, and depreciations in Annex V. It is important to keep all relevant receipts and documents in case of a tax audit.
I hope this information has been helpful to you. If you have any further questions or would like more detailed advice, please do not hesitate to contact me.
Best regards,
Lorenzo Hartmann
