You own a condominium and would like to deduct the ancillary costs from your tax bill. This is generally possible. However, the extent to which the tax office accepts the costs depends on various factors. If you live in the condominium yourself, the options are not as flexible as if you have rented out the apartment. But other things also play a role. Find out here what you should pay attention to.
Attention: Please note that all information is provided without guarantee and that this article does not constitute tax advice. For detailed information on your individual circumstances, please consult your tax advisor.
Deducting the ancillary costs of a condominium for tax purposes: What is important?
As the owner of a condominium, you have to pay service charges. There is no general answer as to how high this payment is and which items it includes. It depends on the size of the apartment, the location and the furnishings. If there is a janitor, all owners must bear the costs. The same applies to winter maintenance and any garden maintenance. Hiring a cleaning company for the corridors and communal areas also incurs additional costs. The owners’ association decides which services are to be commissioned externally and which are to be borne by the owners. Once the amount of ancillary costs has been determined, all owners contribute to the total costs on a pro rata basis. As a rule, a key is used here that is based on the size of the living space.
Energy costs as part of the ancillary costs
The energy costs for gas and water are often part of the service charges. As many condominiums are located in apartment buildings, the costs are also divided according to the fixed key. Service charges are usually billed once a year. You pay a monthly installment. If you have rented out the condominium, the tenant is responsible for payment. As the owner of the apartment, you have probably already asked yourself whether the ancillary costs for a condominium you use yourself are deductible. In fact, this is more difficult than deducting the costs for a rented apartment. The difference lies in this detail.
The tax office knows the difference
The different taxation of condominiums that you live in yourself or that you rent out is due to the fact that a rented condominium is considered an investment property by the tax office. This explains the more advantageous taxation for you. However, this does not mean that you cannot deduct the ancillary costs for an owner-occupied condominium. You can claim some of the ancillary costs even if you live in the apartment yourself. It is important that you take this difference into account when preparing your tax return. Find out which ancillary costs are deductible and what else you need to bear in mind.
What ancillary costs can you deduct for tax purposes if you rent out your condominium?
The ancillary costs for a rented condominium are more tax-deductible than if you live in the apartment yourself. The tax office takes into account the fact that you have made an investment by renting out the condominium. You will receive tax relief for this investment. However, you must meet certain requirements in order to claim the investment. The focus is on the intention to make a profit, which the tax office requires to be proven. This means, for example, that ancillary costs are not deductible if the condominium is vacant. If, on the other hand, it is a new condominium that you want to take over and rent out after construction or renovation, the efforts to find a tenant for a while are sufficient to be able to claim the ancillary costs.
How to prove your intention to make a profit
One basis for deducting ancillary costs for a condominium is that you make an investment. This investment is linked to your intention to make a profit. It is important for you to know that you do not necessarily have to have rented out the apartment at the time you prepare your tax return. Even the intention to let the apartment will be accepted if you can prove this. You should therefore pay attention to these important requirements:
* You are already making a profit from renting or leasing your property
* You would like to let and have already made the necessary preparations
Proving your intention to let - how to do it
If the apartment is vacant and you would still like to claim the incidental costs incurred, prove that you intend to let it. You can then claim the costs for tax purposes.
The tax office recognizes this evidence:
* You are actively looking for a tenant, for example through advertisements on the Internet or in the newspaper
* You have commissioned an estate agent to search for a tenant
* You make appointments for viewings of your apartment or have commissioned one
* You are involved in the planning or implementation of measures to improve the rented property. This includes extensive renovations, but also the renovation or expansion of additional living space
The duration of vacancy has no effect on the acceptance of service charges by the tax office. In plain language, this means that you cannot be penalized if you cannot find a tenant. What counts for the tax office is your efforts to find a tenant. Successful letting should be the goal, but is not the main focus for the tax recognition of service charges.
You can deduct these costs for a rented condominium
If you are planning to rent out your condominium or have found a tenant, you can claim various costs from the tax office for tax purposes. Please note that the costs will reduce your taxable income. You will not receive a direct refund of the amounts from the tax office.
* Advertising expenses
Income-related expenses include, for example, renovation costs, costs for repairs or for a comprehensive refurbishment. You can claim these costs for the previous tax year in full directly from the tax office.
* Costs of the homeowners’ association
The costs of the homeowners’ association are also deductible. This applies to items incurred for the maintenance and care of the house and the complex. These include, among other things:
* Heating maintenance
* Maintenance and repair of the elevator
* Costs for the janitor
* Cleaning the chimneys
* Maintenance of garden and outdoor facilities
Please note that you can only claim costs in this area that relate to your co-ownership share. This is usually determined by the living and usable space. The larger this is, the higher the deductible costs may be.
* Maintenance reserves
Maintenance reserves are the costs that each owner pays proportionately for the maintenance of the common property. The amount of these costs is determined by the community of owners. The size of the apartment also plays a role in calculating the share. You must note that these costs are only deductible as income-related expenses if the administrator of the condominium owners’ association has used them for the maintenance of the common property. This must have happened in the previous calendar year. As long as the reserves are saved, they do not count as income-related expenses.
* Depreciation of operating assets (AfA)
If you rent out your condominium, you have the option of claiming depreciation on operating assets in addition to your running costs. This option is not available to you if you live in the condominium yourself. In this case, ancillary purchase costs such as interest on the loan or account management fees are deductible. The estate agent’s commission also falls into this category.
* Property tax
You can declare the property tax as income-related expenses if you have rented out your property in full. However, this is only possible if the tenant does not pay these costs as part of their utility bill. You may be able to claim these costs for tax purposes if your condominium has been vacant for a longer period of time.
* Costs associated with the construction or acquisition of the property
If you purchased the condominium in the previous tax year or took it over after new construction, you can claim all acquisition and production costs against tax.
These include, among others:
* Notary fees
* Costs for the architect
* Costs for the broker
* Expenses for building materials
You also have the option of claiming the real estate transfer tax for tax purposes.
* Attorney’s fees and court costs
If there is a legal dispute with a tenant, you can deduct the legal fees and court costs from your tax bill.
* Renovation or preservation of a listed apartment
This is a special case. If you have received requirements from the monument protection authorities and implement them, a tax deduction is possible. You declare these costs as maintenance costs. Please note that this is only possible if the conditions imposed by the monument protection authority already existed before you started the work. It is also important for the tax deduction that the measures were agreed with the monument protection authority.
What ancillary costs can you deduct from tax if you use your condominium yourself?
You cannot deduct ancillary costs for an owner-occupied condominium to the same extent as for a rented apartment. Nevertheless, there are various tax-saving options that you should be aware of if you live in your condominium yourself.
* Wages for household-related services
Do you employ a gardener or domestic help? Then you have the option of claiming part of the wages for tax purposes. Please note that the tax office only takes into account the wages, not the cost of materials. You can deduct up to 20 percent of the total costs or a maximum of EUR 510 per year.
* Costs for the services of a craftsman
Here too, only the costs for the service itself, for the journey and possibly for the use of chargeable machines count. You cannot deduct the cost of materials. You have the option of claiming up to 20 percent of the costs. The upper limit is EUR 1,200 per tax year.
* Costs for the repair of storm or flood damage
If you were affected by this damage and have not taken out appropriate insurance, you can claim up to EUR 1,200 per year for the cost of repairs.
* Individual share for work on the residential complexes
You must take on a share of the work on the residential complexes. This includes, among other things:
* Heating maintenance
* Costs for maintenance and repair of the elevator
* Costs for the janitor
* Chimney cleaning
* Garden maintenance
Here you can deduct your individually paid share from tax.
* Maintenance reserves in a homeowners’ association
In this case, these reserves are deductible in the year in which they were used by the administrator of your condominium owners’ association for actual expenses relating to the common property.
* Costs for a study
You can claim these costs if you work exclusively from home. It is important that the home office represents the “center of the entire professional or business activity”:
* Electricity
* Heating
* Water
* Waste water
* Impairment
* Renovation
* Work equipment
You can deduct these costs on a pro rata basis for the room in which you work. They are limited to a maximum of EUR 1,250 per year.
* Conservation and renovation of a listed apartment
The same provisions apply here as for owners of apartments who do not live in them themselves. You can claim the costs of maintenance and refurbishment against tax if:
* the monument protection already exists before the start of the work
and
* the measures have been agreed with the monument protection authority.
It is also important for you to know that, as an owner-occupier, you cannot claim the costs of the notary, the interest on the real estate loan or the real estate transfer tax for tax purposes.
Deducting the ancillary costs of a condominium for tax purposes: What do I need to consider when filing my tax return?
You have gained an overview of which costs you can deduct as income-related expenses or tax-reducing expenses in your tax return. For your declaration, you will need Annex V. This refers to “Income from letting and leasing”. You can claim all relevant costs on this annex.
Keep and submit invoices
The costs can only be recognized by the tax office if you have the invoices. It is important that the material costs are listed separately. These are not tax-deductible. Another important tip is that you should never pay in cash. You always need proof for the tax office that you have actually paid the costs. If you pay in cash, even for small amounts, you do not have this proof. In addition, the tax office does not accept cash payments as a tax write-off.
