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Can i be my own landlord?

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I am a visual (and entrepreneur) and right now I make most of my income from my art.

So far i am renting a flat+studio and declare the portion of my studio space as a business expense.

 

Now that i am ready to buy property in Berlin, i plan to keep a designated space in the property for my studio.

(in the rest of the space i will either live or rent out).

 

From googling I was surprised to find that i cannot declare the relative part of the mortgage as an expense to the Finanzamt.

all i can do is claim the relative part of the Mortgage *Zinsen* (Interest) as a business expense.

how can that be?

I am allowed to declare my studio cost as an expense if i am renting,

but if i pay the same amount on a mortgage, for the same purpose -  i cannot do it?

 

The only solution i can think of - is that "Me" (The future property owner) will rent a part of the property to "me" (The artist) .

And then "Me" the property owner will have to pay income tax from the rental income.

But at least then "Me" the artist, can declare this as a business expense?

or it doesn't make sense at all?

 

Your thoughts?

Kim

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46 minutes ago, KimKim said:

or it doesn't make sense at all?

 

It doesn't.

 

However you can claim for a lot of expenses as Betriebsausgaben. See:

 

"Gebäude-AfA, Absetzungen für außergewöhnliche technische oder wirtschaftliche Abnutzung, Sonderabschreibungen, Schuldzinsen für Kredite, die zur Anschaffung, Herstellung oder Reparatur der Eigentumswohnung oder des Gebäudes verwendet worden sind, Wasser- und Energiekosten, Reinigungskosten, Grundsteuer, Wohngeld ohne Instandhaltungsrücklage, Hausratversicherungen, Renovierungskosten, auch soweit sie aus der Instandhaltungsrücklage bezahlt worden sind, sowie die Aufwendungen für die Ausstattung des Zimmers, wie z. B. Tapeten, Teppiche, Fenstervorhänge, Gardinen und Lampen"

 

 

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1 hour ago, KimKim said:

The only solution i can think of - is that "Me" (The future property owner) will rent a part of the property to "me" (The artist) .

And then "Me" the property owner will have to pay income tax from the rental income.

But at least then "Me" the artist, can declare this as a business expense?

or it doesn't make sense at all?

This country is called Germany, not Greece.

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2 hours ago, KimKim said:

i cannot declare the relative part of the mortgage as an expense to the Finanzamt

 

Not even landlords get to claim for the part of their mortgage that's for repaying the capital: https://www.toytowngermany.com/forum/topic/198964-rental-income-calculation/#comment-2242526

 

Instead, you get to claim for the depreciation on the pure building price (= AfA = Absetzung für Abnutzung).

 

Example:

You buy a flat that's 100m² big for 300,000€.

The studio inside the flat that you use for your freelance activity is 30m² big.

40% of the purchase price is the value of the ground beneath that house, which isn't depreciable since it doesn't suffer from wear and tear 

--> pure building price is 60% of the purchase price of 300,000€ = 0.6 * 300,000€ = 180,000€.

 

If that building was built in 1925 or later, the building gets depreciated over 50 years (= 100%/50 years = 2% per year), if it is older over 40 years (2.5%).

Let's assume the building was built in 1930.

 

You get to claim (= reduces your profit) per year for the depreciation (= AfA):

30m²/100m² * 180,000€ * 2%

= 1,080€ 

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Thank you Panda Munich for the explanation, i'm a panda-groupie for quite some time now.

And how about renting a portion of my own property to myself, or to my business?

 

 

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You can't rent to yourself. 

Only if your business were its own juridical person, e.g. an UG or a GmbH or an AG, could you rent to it.

 

However, there is one disadvantage when using a part of a flat you own for your business, called Betriebsaufspaltung, which happens no matter whether you claim for it directly or rent it to your own GmbH/UG/AG (owning a majority stake in the GmbH/UG/AG is enough): you make the Finanzamt a silent partner in that part of the flat's increase in value, i.e once you stop working from that studio, for example after 15 years your business has grown and you rent a bigger office somewhere, the Finanzamt will then come along and say, mmmh, that studio was worth 90,000€ when you bought it and started using it for your business, in the last 15 years the real estate prices have doubled, so it's now worth 180,000€, so now please pay tax on that "imaginary" profit of 90,000€ (you didn't sell your flat, but they still want that tax because you stopped using it for your business), details in here:

and here:

http://www.steuer-schutzbrief.de/steuertipp-rubriken/steuer-tipps/artikel/steuerfalle-haeusliches-arbeitszimmer-gestiegenen-wert-der-immobilie-versteuern.html

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