What tax obligations do I have as a landlord towards the tax office?
February 17, 2022 | 50,00 EUR | answered by Petra Höfer
Dear tax advisor,
My name is Wilhelm Hoffmann and I am the landlord of a condominium. This year, I have rented out a property for the first time and I am unsure about the tax obligations that I will have to fulfill. I have no prior experience with property rental and I want to make sure that I comply with all legal requirements.
I want to ensure that I correctly declare my rental income for tax purposes to avoid any potential tax pitfalls. Therefore, I am seeking professional advice on understanding my tax obligations as a landlord towards the tax authorities.
Currently, I am unsure if I need to declare my rental income in my income tax return and what expenses I can claim for tax purposes. I also wonder if I need to pay VAT as a landlord and what deductions I can make when renting out my property.
Could you please explain in detail what tax obligations I have as a landlord towards the tax authorities? Are there specific forms that I need to fill out to correctly declare my rental income? What costs can I deduct for tax purposes and what documentation do I need to provide for this?
I look forward to your professional assistance and thank you in advance for helping me clarify my tax matters as a landlord.
Best regards,
Wilhelm Hoffmann
Dear Mr. Hoffmann,
Thank you for your inquiry and your interest in my tax advisory services. As the owner of a condominium, you indeed have certain tax obligations that you must comply with in order to avoid potential tax pitfalls.
First and foremost, you must declare your rental income in your income tax return. This income is treated as income from rental and leasing (§ 21 EStG) and is subject to income tax. You must report your gross rental income, which is the rent you actually received from your tenants. Additionally, you can deduct certain deductible expenses from the rental income to reduce your tax burden.
Deductible expenses may include ongoing operating costs for the rented unit (e.g. property tax, insurance, repairs, management fees), depreciation on the acquisition costs of the property, financing costs (e.g. loan interest), costs for maintenance and modernization measures, as well as management costs (e.g. account maintenance fees, travel expenses). All of these expenses can be claimed for tax purposes and deducted from your rental income.
In order to properly declare your rental income and claim your deductible expenses, you will generally need to fill out a Schedule V in your income tax return. Here, you will enter your income and expenses from the rental property and determine your taxable profit. Additionally, you must report your income from rental and leasing in Schedule AUS of the income tax return.
Regarding value-added tax, as a landlord of residential properties, you usually do not have to pay value-added tax, as the rental of residential housing in Germany is generally exempt from VAT. However, if you rent furnished apartments or commercial spaces, there may be a VAT liability.
To properly manage your tax affairs as a landlord, I recommend keeping all relevant receipts and invoices and maintaining careful bookkeeping. If you have any further questions, please feel free to contact me.
Best regards,
Petra Höfer
