What tax regulations apply to the rental of commercial properties to businesses?
April 6, 2023 | 50,00 EUR | answered by Johann Lauer
Dear tax advisor,
My name is Xenia Bauer and I have been a proud owner of a commercial property for several years, which I rent out to various businesses. Lately, I have noticed that the tax regulations for renting out commercial properties may have changed, and I am unsure if I am doing everything correctly.
So far, I have declared the income from renting out my commercial property as income from rental and leasing in my tax return. However, I have heard that there are specific tax regulations for renting out commercial properties to businesses and I am wondering if I need to adhere to these and if so, what they entail.
My concern is that I may have overlooked tax benefits or obligations and as a result, made mistakes in my tax return. Therefore, I would like to know from you what specific tax regulations apply to renting out commercial properties to businesses, whether there are any tax benefits or obligations associated with it, and how I can correctly declare them in my tax return.
Could you please explain to me the specific tax regulations that apply to renting out commercial properties to businesses, what tax benefits or obligations are involved, and how I can correctly declare them in my tax return? I would greatly appreciate your assistance.
Kind regards,
Xenia Bauer
Dear Mrs. Bauer,
Thank you for your inquiry regarding the tax regulations for renting commercial properties to businesses. It is good that you are thinking about this and want to make sure that you declare everything correctly.
Basically, renting commercial properties to businesses is subject to similar tax regulations as renting residential properties. You must declare the rental income as income from renting and leasing in your tax return, regardless of whether you rent the property to businesses or individuals.
However, there are some specific tax aspects that you should consider when renting commercial properties to businesses. As a landlord, you can deduct certain costs and expenses related to the rental, such as maintenance and repair costs, administrative costs, or financing costs, as advertising costs from the rental income, thus reducing your tax burden.
Furthermore, when renting to businesses, you should ensure that the rent is reasonable. The tax office can review the appropriateness of the rent and make adjustments if necessary. It is therefore important that you set and document the rent in accordance with market standards.
In addition, under certain conditions, you can claim the value added tax on rental income from renting commercial properties to businesses. This is known as the option for VAT liability. This option can be beneficial as it allows you to deduct input VAT and reduce your tax liability.
In your tax return, you should correctly declare all income, expenses, and possibly the VAT. It is advisable to carefully keep all relevant receipts and documents to be able to present them to the tax office if necessary.
I recommend that you consult a tax advisor to discuss your individual situation and tax options. A tax advisor can provide comprehensive advice and help you optimize any potential tax benefits.
I hope that this information has been helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Johann Lauer
Tax Advisor
