How is the property tax treated for rented properties?
June 25, 2024 | 40,00 EUR | answered by Petra Höfer
Dear tax advisor,
my name is Simon Krause and I own several rented properties. In this context, I am currently dealing with the question of how property tax is treated for rented properties. Unfortunately, I have not received clear information on this so far and I am concerned that I may be making mistakes in the tax treatment of my properties.
Currently, I am paying the property tax for my rented properties out of my own pocket. However, I am wondering if it is possible to pass on these costs to the tenants or if there are tax advantages if I continue to bear the property tax myself. Furthermore, I am unsure if property tax is deductible as advertising costs and how this affects my tax burden.
I would greatly appreciate it if you could explain to me exactly how property tax is treated for rented properties and whether it makes sense for me as a landlord to pass on the costs to the tenants. Furthermore, I would be grateful for information on how I can claim property tax as a tax deduction and if there are possible ways to save money.
Thank you in advance for your help and support.
Sincerely,
Simon Krause
Dear Mr. Krause,
Thank you for your inquiry regarding property tax on rented properties. I can understand that you are concerned about how to best handle and optimize the property tax. I am happy to explain the key points to you.
Property tax is a local tax levied on the ownership of land and buildings. As a landlord, you are generally required to pay the property tax for your rented properties. However, you can pass on the costs to the tenants if this is agreed upon in the rental contract. Passing on the property tax to the tenants is common and generally allowed. It is important that the allocation of property tax in the rental contract is clear and that tenants are informed about it.
If you bear the property tax yourself, you can deduct the costs as advertising expenses from the rental and leasing income. This means that property tax is tax deductible and can reduce your tax burden. If you pass on the property tax to the tenants, you can book the income from the allocation as rental and leasing income.
There are various ways to optimally use property tax for tax purposes. For example, you can consider whether it is beneficial to pass on the property tax to the tenants or continue to bear it yourself. In some cases, it may be advantageous to pass on the costs to the tenants to reduce your tax burden. It may also be beneficial to spread out the payment of property tax over several years to take advantage of tax benefits.
If you have any further questions about the tax treatment of property tax or other tax-related topics, I am happy to assist you. I hope this information was helpful to you. If you need more information, please feel free to contact me.
Best regards,
Petra Höfer
Tax Advisor
