Is trade tax also levied on rental income?
May 31, 2022 | 50,00 EUR | answered by Isabel Möller
Dear tax consultant,
My name is Gerd Richter and I am a self-employed entrepreneur. In addition to my main business activities, I also generate income from renting out commercial properties in my company. Now I am wondering whether these rental income are subject to trade tax.
My previous understanding of trade tax was that it is levied on the profits from the business operations, i.e. the actual entrepreneurial activities. However, since the rental income from commercial properties is not directly related to my main business operations, I am unsure whether they are also subject to trade tax.
I am concerned that I may have to make tax payments if the rental income is indeed subject to trade tax. Therefore, it is important for me to know if and to what extent the rental income is included in the calculation of trade tax and how I can best secure myself tax-wise in this respect.
Could you please explain to me whether rental income from the rental of commercial properties is subject to trade tax and if there are any possibilities to optimize this tax-wise? I would be very grateful for your support.
Yours sincerely,
Gerd Richter
Dear Mr. Richter,
Thank you for your question regarding trade tax in relation to rental income from commercial properties. I understand that you may feel unsure and concerned about possible tax payments. I am happy to explain how trade tax is handled in this case and how you can best protect yourself tax-wise.
In principle, not only profits from actual business activities, but also income from the rental of commercial properties are subject to trade tax. This means that rental income is also included in the calculation of trade tax. However, there are ways to optimize this tax-wise and reduce the tax burden.
Firstly, you should check if you can claim the so-called threshold for trade tax. This is currently 24,500 euros and means that profits up to this threshold remain tax-free. So if you stay below this threshold in total, you do not have to pay trade tax, whether it is profits from your actual business operations or rental income.
Furthermore, there is the possibility to claim certain costs related to the rental of commercial properties as tax-deductible. These include, for example, maintenance and repair costs, administration costs, insurance premiums, or depreciation on the building. By stating these costs in your tax return, you can reduce your tax burden.
However, it is important that you carefully document and substantiate all income and expenses. Good bookkeeping is essential here to be able to provide all necessary documents in case of a tax audit. Additionally, I recommend seeking advice from an experienced tax advisor to optimize your tax situation and maximize potential tax benefits.
I hope that this information has been helpful to you and I am available for any further questions. I wish you success in optimizing your tax situation and am here to support you at any time.
Sincerely,
Isabel Möller
