What are the tax implications of renting out garages or parking spaces?
June 1, 2023 | 45,00 EUR | answered by Lucas Krebs
Dear tax advisor,
My name is Greta Lenzner and I have been renting out garages and parking spaces for some time now. I have heard that there are specific tax regulations regarding the rental of garages and parking spaces, and I am unsure of how to properly declare my income from this rental activity.
Currently, I am renting out a total of five garages and three parking spaces in a residential area in the city center. The garages and parking spaces are all rented out on a long-term basis, and the monthly rental income is an important source of revenue for me. Since I have no previous experience with the rental of garages and parking spaces, I am concerned that I may be making tax errors and potentially encountering issues with the tax authorities.
Therefore, my question to you is: What are the tax implications of renting out garages and parking spaces, and how should I correctly declare my income from this rental activity? Are there any specific tax benefits or reliefs that I can take advantage of? What documents do I need to prepare for tax filing, and what particularities should I consider in bookkeeping?
I would greatly appreciate your help in answering these questions so that I can conduct my rental activity in an orderly and tax-efficient manner.
Thank you in advance for your assistance.
Sincerely,
Greta Lenzner
Dear Mrs. Lenzner,
Thank you for your inquiry regarding the tax regulations for the rental of garages and parking spaces. It is understandable that you are concerned about how to properly declare your income to avoid potential issues with the tax office. I am happy to provide you with detailed information on this topic.
First of all, it is important to know that the rental of garages and parking spaces is considered rental income according to § 21 of the Income Tax Act (EStG). This means that your rental income is generally subject to income tax. The amount of tax depends on your individual tax rate.
However, there are also certain tax benefits that you can take advantage of. For example, you can deduct expenses related to the rental as advertising costs. These may include costs for repairs, maintenance, administrative expenses, insurance, or depreciation on the acquisition costs of the garages and parking spaces. These costs reduce your taxable income and can therefore reduce your tax burden.
For the tax declaration related to the rental of garages and parking spaces, you must provide the relevant income and expenses to the tax office. Therefore, you should carefully keep all relevant documents, such as rental agreements, invoices, bank statements, receipts for repairs and maintenance measures. Proper bookkeeping is essential to keep track of your financial transactions.
It may also be useful to seek support from a tax advisor to ensure that you make optimal use of all tax opportunities and accurately account for them. An expert can help you identify tax benefits and professionally prepare your tax return.
I hope this information is helpful to you and wish you success in your rental activities.
Sincerely,
Lucas Krebs, Tax Advisor
