Rental income calculation

39 posts in this topic

I found here this application (in english) which ease the calculations.

 

http://www.parmentier.de/steuer/steuer.htm?incometax.htm

 

Now it is said that to your income, in case you're a foreingner, 8004€ has to be added to the income for tax calculation.

So if i were to gain 12000€ as a rental income, the taxable income would be 20000€.

 

Do you agree?

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What? Who says that? Where?

 

Could you give us a little information about your situation? Are you planning on moving to Germany? Is your rental income in Italy? Throw us a bone here, please.

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I found here this application (in english) which ease the calculations.

 

http://www.parmentier.de/steuer/steuer.htm?incometax.htm

 

Now it is said that to your income, in case you're a foreingner, 8004€ has to be added to the income for tax calculation.

So if i were to gain 12000€ as a rental income, the taxable income would be 20000€.

 

Do you agree?

 

Sort of. If you're a resident in Germany and your income is 12,000€, your taxable income would be 3996€, because you get to deduct 8004€. If you're not a resident, your taxable income would be 12,000€.

 

This calculator assumes that you're a resident, so it automatically applies the 8004€ standard deduction, which means you as a non-resident would have to add 8004€ to the stated income when using this particular calculator.

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Thank you very much for the answers.

I'm thinking to buy a house in germany (Munich) and rent it, as an investment.

So at least for a few years i'll be a foreigner who has a rental income generated in germany, still living in Italy.

 

"For a few years" cause i'm planning to move there because my company has offices in Munich and i always liked to change.

 

Now at the web address which i mentioned

http://www.parmentier.de/steuer/steuer.htm?incometax.htm

it is said:

 

Non-residents (not living in Germany) with income in Germany (such as property let) are subject to limited income tax liability. They could only deduct expenses which relates to the income (such as renovating the appartement) and have no basic tax allowence. So for 2009 to the income (expenses deducted) the amount of 7.834 € (2010/2011: 8.004 €) have to be added before calculating the income tax (§50 EStG)

 

I asked the creator of the site if the 12000 (my gross rental income)+8004 = 20004 was the taxable income and he answered me "unfortunately yes".

But i've also found an english translated book on the German tax laws which is:

 

http://books.google.it/books?id=TAHtXWpA9soC&pg=PT147&lpg=PT147&dq=rental+income+germany&source=bl&ots=yI3E_FiqG-&sig=5qhgJyaOkj462WdY_SUBn_6rK04&hl=it&ei=2K7_TLzKI4Ki4Qbqlo3wCA&sa=X&oi=book_result&ct=result&resnum=10&ved=0CGgQ6AEwCTgK#v=onepage&q=non%20residents&f=false

 

where it is said that non-resident taxes are paid starting from a fee of 25% while residents starts from 14%.

 

So the possible scenarios are basically three (considering what i found over the web):

 

1-i pay progressively starting from a minimum of 25% of the rental income.

2-i pay progressively like what i found on germantaxes.info tables

http://www.steuerliches-info-center.de/cae/servlet/contentblob/151664/publicationFile/2526/est_Tabelle_2010.pdf

3-i pay adding the 8004€ to my income (whatever it is) and then i apply the tables at point 2 or use the automatic calculator on the www.parmentier.de (tables and calculator give the same result).

 

Note that i also called the tax department in munich but the employ answered that he didn't know what to say and sent me back to the German Embassy in Italy. :D

 

The answer of bal00 look similar to the point 3.

 

Once i've opened an account in a german bank, may i ask them to fill my tax return and/or to pay everything taking funds from my account?

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If you can afford to purchase superflious property in another country, can't you afford an accountant?

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Well i always try to find information asking, googleing and reading, before i pay.

There's nothing worse than to know that you payed for something that everybody was aware of.

Double check is also necessarily.

But you're absolutely right, in point of fact, i've yet asked for an accountant to the german real estate agent, who couldn't help.

 

Obviously any one who payed the information (whatever it is) is not inclined to share it, like we don't share our cars and i can relate.

 

Thanks.

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Francs: can understand your wish to check-out things yourself very well. But German tax system is about the worst in the world, a true maze. Did you know that 2/3 of the worldwide literature about taxes and taxation is written about the German tax system? TRust me, I know that, I have a degree in International Taxation from HLS and seen the library more often than I wish to remember.... :rolleyes:

 

So, best idea is really to let a tax advisor help you who is deep into double taxation issues... A number of these are advertising on Toytown, I can - because a lot of my clients use him and are very satisfied - recommend Thomas Zitzelsberger from ExPatTax. http://www.toytowngermany.com/munich/zitzelsberger_expat_tax_advice.html

Best of all - he can help you by email, so that will make things easier for you.

 

I would assume that at first the German tax authorities would withhold a certain amount of tax and then you'll either get some back or have to pay some more in Italy, depending on the difference in tax rates between the two countries...

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Ok.

You're absolutely right.

I contacted a professional foreign taxation studio via email and they answer that the taxation on the rental income for a foreigner, non resident, EU citizen will be exactly the one calculated via the

 

http://www.parmentier.de/steuer/steuer.htm?incometax.htm

 

by adding the 8004€ to your income.

Then you have to deduct expenses (don't know what kind expense you can deduct) and depreciation which is: (the market price of the house) x 75% x 2% (that is multiply by 0.015) for buildings built after 1960.

 

To triple-check: i've also transfer a hundred € to a german (Munich) tax accountant, english speaking, to simulate my income with more precision. As soon as i get the results, i'll post here, they may be useful to everybody. I don't think i'm violating any professional secret cause every taxable situation is different and varies from an year to another.

 

It seems that i'm soooooooooooo rich that i can also afford to give away information! :P

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Well, thanks a lot, don't know what else to say, this is way more detailed info than what i had intended to ask for.

I'm also under the impression that i've had given a bad impression of myself and i'm really sorry if i have.

Now i'll print it and study it.

Thanks again.

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Hello everyone.

 

I am going to fill form Anlage V(first time for this apartment) and I am wondering if I can include my travel ,accommodation and other expenses ,related to "viewing-buying" process. I know I can include notary and agent fees to line 37, but not sure about rest of expenses.

Thanks, in advance.

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In line 37 you would only put notary costs related to the loan. All other costs related to the buying process (including notary and agent) are part of your "Anschaffungskosten" (purchase cost). The correct differentiation between notary cost in case 1 and 2 might not be so easy. (A case for a paid professional maybe?)

 

Purchase costs obviously can´t be deducted directly. They will be amortized over a certain amount of years. See line 33

 

Of course there could also be travel costs related to the normal business of being a landlord...

 

If you are doing this the first time, it might be a good idea to talk to a tax advisor.

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I know I can include notary and agent fees to line 37

As Freising said, line 37 is for the part of the notary costs and entry cost into the Grundbuch (= land registry) that pertain only to the mortgage you took from the bank to pay the apartment.

If you did not take out a mortgage/bank loan to pay for the apartment, you will not put anything in line 37.

If you do have a mortgage you should read both the notary's invoice and the invoice from the Grundbuchamt (that amount may be included in your notary fee, i.e. the notary paid it for you and then asked you to reimburse him for it) attentively and find out which amount of the whole pertains to registering the mortgage, only that amount are you allowed to put into line 37 and are allowed to depreciate immediately.

 

The rest of the notary fee, the fee to enter your name into the Grundbuch and the fee of the real estate agent (= Makler) are considered to be an integral part of the apartment price and you are not allowed to depreciate them immediately, but only over 50 years, and only that part of them which pertains to the building (not the part pertaining to the land the building stands on) so they become part of the your yearly depreciation amount.

 

This was explained in my example calculation, so here it is again:

 

Example:

Bodenanteil = value of ground your apartment stands on: 50/1000 x 400qm = 20sqm

Bodenrichtwert= "imaginary" value per sqm: 3,000 €/qm

Wert Bodenanteil = value of ground part = 20sqm x 3,000 €/sqm = 60,000€

Prozentsatz Bodenanteil = percentage of ground costs = 60,000€ / 180,000€ = 33.33% (assuming you paid 180,000€ for the apartment)

 

Now we get on to the calculation of the "Pure building price":

180,000€ Purchase price of apartment

1,000€ cost of notary

6,264€ estate agent fee (3.48% of purchase price) --> now with 19% VAt it will be 3.57%

500€ fee to enter your name into the land register

6.300€ real estate transfer tax (3.5% of purchase price)

______________

194.064€ real total purchase price

--> part of that for ground: 33.33%: 64,688€

--> part of that only for building: 66.67% = "Pure building price": 129,376€

 

Depreciation over 50 years (I assume it was built after 1924):

0.02 x 129,376€ = 2,587.52€ is the yearly depreciation

 

line 33, column 1 and column 4: put in the amount of yearly depreciation, e.g. 2,587.52€

 

*********************************************

 

 

I am wondering if I can include my travel ,accommodation and other expenses ,related to "viewing-buying" process

Of course.

You attach a page where you list and add up all those expenses and to which you also attach proof, e.g. original train tickets, hotel invoices, ...

The sum of these costs you then put into line 49: Sonstiges of the Anlage V.

They are part of your "Werbungskosten".

 

Definition of "Werbungskosten" = all expenses you had to:

 

  • buy the apartment,
  • to keep it and
  • to ensure continuing rental income

 

 

 

Werbungskosten sind alle Aufwendungen eines (zukünftigen) Haus- oder Wohnungseigentümers zum Erwerb, zur Sicherung und zur Erhaltung der Mieteinnahmen (source: § 9 Abs. 1 EStG).

You can claim a lot of costs as Werbungskosten in Anlage V, so here's a list (ignore the line numbers they quote in that list for Anlage V, those refer to an older version of the Anlage V):

- list machine translated into English

- list in German original (so that you know the proper German terms for each cost category)

 

I suggest you go through this list and see which of the expenses you had.

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Hello and thank you all, who reply for your help.

 

The things are become more clear and understandable after your explanations. I will try to fill Anlage V on my own. I know I might make some mistakes, but I have tried to contact few tax advisers and the result was close to nothing. Some of them were too busy to take the work; some were too busy even to answer on emails. Your instructions, PandaMunich are very helpful and I hope even if I make some mistakes, tax office will always correct me.

Thank you again.

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Hello everyone.

 

I am going to fill form Anlage V(first time for this apartment) and I am wondering if I can include my travel ,accommodation and other expenses ,related to "viewing-buying" process. I know I can include notary and agent fees to line 37, but not sure about rest of expenses.

Thanks, in advance.

 

 

If I can add one quick note here, this is a situation where a steuerbreater would be extremely helpful. Yes they are expensive but in situations where you're taxes are complicated they can be worth their weight in gold. For two reasons, one is they can give out tax advice and secondly they can go to bat for you when you have a problem with the Finanzamp

 

On the first point I was discussing this very issue (cost - HOW MUCH!!!) and relayed a great example of a client who didn't call for advice and got hit with a 60,000€ tax bill on the sale of a property!!!

 

Second point, personal experience my Wife did some retraining and our steuerbreater went to bat for us along with other stuff I figured she saved us in the range of 3000 to 5000 Euros (this was years ago)

 

The only time I don't really recommend it is if you're earning a salary with nothing out of the ordinary, if you don't want the hassle than use Lohnsteuerhilfe. About half the cost.

 

Oh and yeah, you can make three trips a year no questions asked to see your property. For us this means we can drop in and see family and friends while checking out our properties!

 

I can recomend Expattax

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Hi all,

 

one question from me here.

 

I am single, living in Germany and I earn 50.000€ gross per year. I am thinking of buying a flat in the city where I live and rent it out. The rent I would be receiving would be 400€ p.m = 4800 p.y.

 

What would be the extra taxes this new rental income will bring?

 

I looked for something relevant in the site but I could not find it. In case there is, please let me know.

 

Many thanks for your responses.

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Hard to say.  What are the expenses you will incur which are offsettable against tax?  I presume you are buying on credit (mortgage) rather than cash?

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Not much that I know off. The interest rate of course that would be around 15000 € in the next 10-12 years.

 

But, let´s assume I have no tax deductible expense. How would it work?

 

Thank you

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But, let´s assume I have no tax deductible expense. How would it work?

 

Rental income is added to your income. So just look up on how much tax you would have to pay if you earned €54800 in the German tax calculator

 

 

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