How can I reduce my taxes when my property is vacant?
January 15, 2024 | 40,00 EUR | answered by Lucas Krebs
Dear tax advisor,
I am Erwin Ehlert and I own a rented property. Unfortunately, it has been vacant for some time and I am concerned about the tax burden resulting from the vacancy. I have heard that there are ways to reduce taxes in such cases, but I am unsure about the best approach.
The current situation is as follows: My property has been vacant for three months since the last tenant moved out and a new tenant has not been found yet. This is causing me monthly expenses that I currently have to bear alone. This is putting a financial strain on me and I would like to know if there are any tax measures to reduce this burden.
My concern is that I may have to pay high taxes due to the vacancy, even though I am already experiencing losses from the lack of rental income. I would like to know what options are available to reduce my tax burden and how best to implement them.
Therefore, my specific question is: How can I reduce my taxes when my property is vacant? Are there any specific tax depreciation options or other measures I can take to minimize the financial burden of the vacancy?
I thank you in advance for your support and look forward to your helpful tips and advice.
Sincerely,
Erwin Ehlert
Dear Erwin Ehlert,
Thank you for your question and for trusting in my expertise as a tax advisor in the area of rental/leasing. It is understandable that you are concerned about the tax burden resulting from the vacancy of your property. In such cases, there are indeed ways to reduce your taxes and minimize the financial burden.
First of all, it is important to know that you can deduct the costs incurred by the vacancy for tax purposes. This includes ongoing operating costs for the property, such as property taxes, insurance, repair and maintenance costs. These costs reduce your taxable base and can therefore reduce your taxes.
Furthermore, there is the option to depreciate the property. This involves the linear depreciation of the building over a period of 50 years. Through this depreciation, you can deduct a certain percentage of the acquisition or production costs as operating expenses each year, thereby reducing your tax burden.
If your property remains vacant for more than a year, you can also take advantage of a so-called "transition period." During this time, you can continue to deduct the costs for the property as operating expenses, even if no rental income is generated. This measure is intended to provide financial support to landlords in difficult times.
It is advisable to consult with a tax advisor to discuss and implement the specific tax options for your individual case. A tax advisor can help you gather all relevant data and documents and develop the best possible tax strategy for you.
I hope this information is helpful and supportive in your situation. If you have any further questions or would like a more detailed consultation, I am at your disposal.
Best regards,
Lucas Krebs
Tax advisor in the area of rental/leasing
