UK rental income on German tax returns (post-Brexit)

172 posts in this topic

37 minutes ago, PandaMunich said:

To get 2,200€ extra tax because of Progressionsvorbehalt in the Splittingtarif (= filing jointly), you would need something like 90,000 taxable family income, i.e. income after deduction of your health insurance and 92% of your public pension contribution and 16,500€ in UK rental profit: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

 

@Auntie Helen

Have you tried looking in your tax software's Berechnung document and there on the page "Vergleich der Veranlagungsarten"?

Because it may show you that "filing separately" is more advantageous.

 

Hi Panda, I do file separately as my husbands and my money is completely separate.

 

The figure of my rental income for both houses that WISO spits out at the end of all of that (I have a separate Ablage for the Anlage V so it is not attached to my existing money)  gives me a profit of 24.282 EUR for the year, calculated according to German rules (as far as I can find). Which is very irritating as I am paying off a huge renovation project from 2020 and won't ACTUALLY make any profit for another year, my UK tax returns are showing a loss for 3 years as a result. But Germany isn't interested in that.

 

When I put that amount into my real Ablage, plus a few minor other things (a bit of investment income from the UK and tiny amounts of bank interest) my WISO tells me that my Nachzahlung now is 2078 EUR. Is that definitely incorrect then for Steuerklasse 4? My earnings in Germany are just under 20k Brutto, so I actually earn more from my UK property than from my proper (albeit part-time) job in Germany.

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1 hour ago, Auntie Helen said:

I do file separately as my husbands and my money is completely separate.

Even if you had Gütertrennung in your Ehevertrag, you could still file jointly, and then either use the table on the page "Vergleich der Veranlagungsarten" in the Berechnung of your tax software to see which of you owes how much, i.e. to split it up amongst yourselves, internally.

Or if you want it "official", you could apply at the Finanzamt for them to do an "Aufteilung der Steuerschuld" according to §§ 268 bis 280 AO, then each one of you gets a piece of paper from the Finanzamt with her/his "part" of the tax set in the joint Bescheid: https://www.anwalt.de/rechtstipps/aufteilung-der-steuerschuld-zwischen-eheleuten-nutzen_109350.html

 

1 hour ago, Auntie Helen said:

... I am paying off a huge renovation project from 2020 and won't ACTUALLY make any profit for another year, my UK tax returns are showing a loss for 3 years as a result. But Germany isn't interested in that.

Let me introduce you to §82b (1) EStDV, which offers an exception to the strict "only claim expenses in the year they were paid-rule of §11 (2) EStG.

It allows you to "spread" the cost of major repairs over up to 5 years.

The nice thing is that nowhere in the law do they actually define what "major" means, so there is no limit amount, i.e. you could spread even "low" repair costs over 5 years and there is nothing the Finanzamt can do about it ;)

 

§82b (1) EStDV: https://dejure.org/gesetze/EStDV/82b.html

  • 1The taxpayer may, notwithstanding section 11, subsection 2 of the Act, spread larger expenses for the maintenance of buildings which, at the time of the payment of the maintenance expense, do not belong to business assets and are predominantly used for residential purposes evenly over two to five years.2A building is predominantly used for residential purposes if the floor area of the rooms of the building used for residential purposes amounts to more than half of the total usable floor area.3 Garages belonging to the building shall be treated as serving residential purposes irrespective of their actual use, insofar as they cannot accommodate more than one passenger car for each dwelling located in the building.4Rooms for the storage of additional motor vehicles shall always be treated as not serving residential purposes.

So as to not "lose" more than 1/5 of this 2020 repair expense, I would suggest spreading it over 5 years.

 

Example: 

You replaced the windows and repaired the roof in 2020, total cost 40,000€.

You use §82b (1) EStDV to spread this repair cost over 5 years:

  • 8,000€ expense in 2020, which are "lost" to you. But neither did you have to pay the "Brexit Progressionsvorbehalt tax" in 2020.
  • 8,000€ expense in 2021
  • 8,000€ expense in 2022
  • 8,000€ expense in 2023
  • 8,000€ expense in 2024

Basically, your situation is exactly the same as the one in the example in this commentary, where someone had forgotten to claim for 50,000€ of repair costs in the year they had them, and by using §82b (1) EStDV "saved" at least 4/5 of the expenses by spreading the repair cost over 5 years: https://www.haufe.de/personal/haufe-personal-office-platin/frotschergeurts-estg-21-vermietung-und-verpachtung-5325-groesserer-erhaltungsaufwand-82b-estdv_idesk_PI42323_HI1394508.html

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Wow, that has had a MASSIVE effect on my rental income for 2021.

 

I had 60k EUR of renovation costs in 2020 and I have now entered them into my WISO and the "Steuer zu Zahlen" figure went from 3.700 EUR to 523 EUR. WISO divided the 60k into five and allocated 12K to offset my 2021 income. I put all 23 separate invoices together into one (calculated the exchange rate for the month that the invoice came) as I didn't want to put them all in separately, but I may have to do that if the Finanzamt ask to see my workings.

 

I will see what effect that has on the Progressionsvorbehalt in my "real" tax return...

 

EDIT, knocked it down to 1.343 EUR in total Nachzahlung. Which ain't too bad.

 

I am still waiting for a few more bits of paperwork from German banks etc so I am no way finished but I am making good progress.

 

Thanks to Panda for her answers on here and previously a short email correspondence with me (I kept everything she said to help me with the filling in) - and of course other commenters. No doubt I am still missing a few tricks but I have several months to improve/refine my information so I get everything absolutely correct. But this rental income thing was really a bit stressful as it is completely new to me in German tax law and, of course, it's all because of Brexit.

 

Hopefully some of you other Brits out there also enjoying this new Brexit Bonus can give some hints and tips too.

 

One annoyance is that my WISO software doesn't show the Box Numbers on the different Anlage so I have printed a paper copy of each out so I can see the order that the sections are in, plus their numbers (which Panda refers to) so I can find them in my WISO software.

 

Oh, and I am on purpose keeping all my finances separate from my husband, including tax returns. One of the real freedoms from my previous divorce (from a very lovely man, we had a good marriage for most of the time) was the freedom to do what I want with my own money. I never want to be beholden to a man for any financial decision with my money. Thus I do everything on my own, including fighting with the German tax return. 

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21 minutes ago, Auntie Helen said:

One annoyance is that my WISO software doesn't show the Box Numbers on the different Anlage so I have printed a paper copy of each out so I can see the order that the sections are in, plus their numbers (which Panda refers to) so I can find them in my WISO software.

 

You can always also take a look at your figures filled into in the "paper" forms, by clicking on "Formulare" at the top:

61edb0cd15805_2022-01-2320_44_01-d025332

 

And you will see all the forms, including the line number and field numbers, with what you have filled until now.

And you can click on each amount (they are links) and it will take you right to the section of the software in which you give in the amount for that field:

124593_3.jpg.0422b3f39d7e69d4273fa30e3ad

 

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On 22/01/2022, 19:23:20, PandaMunich said:

For the old GBP to DM (Deutsche Mark) exchange rates, put the GPB file "Devisenkurse der Frankfurter Börse / 1 GBP = ... DEM / Vereinigtes Königreich" from here: https://www.bundesbank.de/dynamic/action/de/statistiken/zeitreihen-datenbanken/zeitreihen-datenbank/759778/759778?listId=www_s331_b01011_3

into the cart by clicking on the cart symbol at the right of the table.

 

Hello Panda,

 

Having done my more recent property I decided to have a stab at the property built for my grandmother in 1938 which she gave to me in 1984.

 

The house cost a grand total of 541 GBP (I have the conveyancing document from 1938 in front of me!) but the exchange rate list above doesn't seem to go back that far. I had a look around on the Bundesbank website but couldn't see anywhere obvious where this information might be. Or is it too far back in history now? I guess it isn't a conversion to DM but to Reichsmarks...

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1 hour ago, Auntie Helen said:

Having done my more recent property I decided to have a stab at the property built for my grandmother in 1938 which she gave to me in 1984.

 

The house cost a grand total of 541 GBP (I have the conveyancing document from 1938 in front of me!) but the exchange rate list above doesn't seem to go back that far. I had a look around on the Bundesbank website but couldn't see anywhere obvious where this information might be. Or is it too far back in history now? I guess it isn't a conversion to DM but to Reichsmarks...

In such a case, I would write an e-mail to the Bundesbank and ask them what 541 GBP in 1938 would be worth in €, explaining that you need the value for the Finanzamt: info@bundesbank.de

That way, you have the "official" figure and have a document to show to the Finanzamt in case they query the amount.

 

From a first google, I expect something like this for 1938:

--> so 541 GBP in 1938 would be:

  • 541 GBP * 12.4 RM/GBP * 4.3 €/RM = 28,846.12€
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21 hours ago, Auntie Helen said:

Having major trouble with the quote feature here so have given up.

 

It was weird I couldn't attach the image as it was only 125kb but I gave up in the end.

 

The reason I included that image was not really about the CGT but that my Dad commented that "if I went off to live in Germany". This was in 2008, years before I decided to decamp to Germany, so a bit spooky! 

 

In no way will I sell or give my property away to anyone, it is in my will to go to my sister/nieces when I die, and only if I absolutely have to sell it because i have run out of money will I do so. And then I will pay the CGT of course, which is only fair! My husband and I did an Ehevertrag before we married last August to keep our money entirely separate and that's how I want it, but I see why Murphaph suggested it. 

 

I think I confused the issue with the quote from my Dad's email - it was all about "disappearing to Germany", not about avoiding CGT.

 

Anyway, I THINK I may have made some progress with the tax return and my Brexit Bonus Extra Tax Burden due to Progressionsvorbehalt is about 2200 EUR which is not the end of the world. This is not including any depreciation figure in the properties as I think it's just too complex to prove values etc as I have no official document with the purchase price, just notes from my parents. This was all yonks ago and no-one knew then that the Germans might be interested! 

Bless your dad for taking care of matters…..and for giving you a a future hint to move to Germany!

 

Congratulations on your marriage. I wish you both all the very best.

 

Regarding attachments…..if I try to attach a photo that’s too big. I have to reduce the size accordingly and log out of TT. Then log back in and attachment then works fine.

 

 

 

 

 

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1 hour ago, emkay said:

Regarding attachments…..if I try to attach a photo that’s too big. I have to reduce the size accordingly and log out of TT. Then log back in and attachment then works fine.

Aha, that must explain why I couldn't upload the photo. It was too big at first and then I shrunk it down to 140k but TT still didn't want to play. One learns something new every day!  Thank you!

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1 hour ago, PandaMunich said:

In such a case, I would write an e-mail to the Bundesbank and ask them what 541 GBP in 1938 would be worth in €, explaining that you need the value for the Finanzamt: info@bundesbank.de

That way, you have the "official" figure and have a document to show to the Finanzamt in case they query the amount.

 

From a first google, I expect something like this for 1938:

--> so 541 GBP in 1938 would be:

  • 541 GBP * 12.4 RM/GBP * 4.3 €/RM = 28,846.12€

Thanks so much Panda. I have written to the Bundesbank and also to my local Finanzamt asking them for the official figures, let's see what happens. This works out at 460ish Euros off my profit each year for the next 12 years if it works out so that definitely means I owe you a drink if ever I am in München!

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7 hours ago, emkay said:

Regarding attachments…..if I try to attach a photo that’s too big. I have to reduce the size accordingly and log out of TT. Then log back in and attachment then works fine.

 

6 hours ago, Auntie Helen said:

Aha, that must explain why I couldn't upload the photo. It was too big at first and then I shrunk it down to 140k but TT still didn't want to play. One learns something new every day!  Thank you!

Actually, reloading the page suffices.

You reload the page by clicking on the "reload/refresh" icon at the top of your browser:

RefreshArrow.png.10911c2c308d50310f5e983

Toytown then erases the bit set to "you tried to upload a too big image", which means that you can now upload the properly sized image.

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I'm getting ready for our UK rental income in our 2021 Steuererklaerung.

 

A.) As for calculating the AKA, depreciation, I expected they want to know the original purchase price, but I'm surprise I don't find where to enter it. Is this correct?

B.) They ask for  Einheitswert-Aktenzeichen which of course I don't have, the property is in a different country. Should I just leave it empty?

C.) this property is let via an estate agent, where do we enter his fee? Is it Verwaltungskosten? Or as Werbungskosten?

D.) Where do I enter costs for repairs? And insurance?

 

Thanks,

 

 

Screenshot (253).png

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1 hour ago, Gambatte said:

I'm getting ready for our UK rental income in our 2021 Steuererklaerung.

 

A.) As for calculating the AKA, depreciation, I expected they want to know the original purchase price, but I'm surprise I don't find where to enter it. Is this correct?

B.) They ask for  Einheitswert-Aktenzeichen which of course I don't have, the property is in a different country. Should I just leave it empty?

C.) this property is let via an estate agent, where do we enter his fee? Is it Verwaltungskosten? Or as Werbungskosten?

D.) Where do I enter costs for repairs? And insurance?

 

Thanks,

 

 

Screenshot (253).png

 

No, you do NOT fill in Anlage V in your tax return on Elster.de.

Because if you do that, your UK rental income will be taxed by the Finanzamt, i.e. as if the flat/house were in Germany!

 

Do the UK rental calculation in Excel, by copying the "headings" from Anlage V into Excel and then filling in your amounts in Excel: https://www.steuertipps.de/downloads/article/aav_11786726814/1/aav_anlage_v_2021.pdf?link=https://www.steuertipps.de/steuererklaerung-finanzamt/themen/anlage-v-einkuenfte-aus-vermietung-und-verpachtung
Instructions for calculating the UK rental profit according to German rules, i.e. what to fill in under these headings that you just copied to Excel: https://www.toytowngermany.com/forum/topic/198964-rental-income-calculation/#comment-2242526

 

And then you transfer only the one amount, the resulting UK profit amount as calculated according to German rules, into Anlage AUS, line 36https://www.formulare-bfinv.de/ffw/catalog/openForm.do?path=catalog%3A%2F%2FSteuerformulare%2Fest%2Fest21%2F034010_21&setCurrentFolder=true

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59 minutes ago, Gambatte said:

@PandaMunich, are you saying I don't submit Anlage-V at all?

Yes, that's what I am saying.

Because if you do, the risk that the Finanzamt caseworker doesn't stop to think and simply taxes your UK rental profit is too high.

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@PandaMunich, thanks a lot.

I'm actually happier to submit only Anlage-AUS.

But you wrote in this thread, 23.2.2021, that we can submit either V and AUS, or only AUS, and submitting only AUS will prompt the FA to ask for calculation, to ensure we calculate correctly.

So if I do NOT submit Anlage-V, should I add my own calculation (what format? pdf? Excel?), so they see I calculated my UK rental profit correctly?

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The Finanzamt only accepts pdf files, they're afraid of viruses.

Print your Excel calculation to pdf.

Then do a Belegnachreichung in Elster, and attach that pdf file with the UK rental profit calculation. Also attach the proof for your paid UK NI contributions in the pdf format to that Belegnachreichung.

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On 23/01/2022, 18:20:56, GaryC said:

Not my area of expertise but an extra 2,200€ per year, just for the progressionsvorbehalt?  That seems a lot.  Are you sure you have the numbers in the correct boxes?  

Hi GaryC,

 

I have done a bit more work on this and have ended up checking in WISO what happens to my tax if I include my UK rental income or exclude it.

 

If I put my UK rental income PROFIT in Anlage AUS line 36 (Nach DBA steuerfreie Einkünfte/Progressionsvorbehalt), which ended up as about 13.600 EUR, I end up with a total Nachzahlung of 1.400 EUR at the moment.

 

If I exclude it (delete the rental income from Anlage AUS, line 36), my current tax bill (still a few things to finalise) is -20 € with WISO (so a Rückerstattung of 20 EUR)

 

That means this rental income of 13.600 has increased my tax burden by 1.420 EUR. That's about 10% of the rental profit, although I am theoretically not being taxed on it!

(For info, my salary income in DE was just under 20k and I have a few other bits and bobs in there such as Behinderungsgrad, bank interest, shares profit etc but nothing else dramatic).

 

Does this 1.420 EUR still seem too high?

 

I am pretty sure I have the numbers in the right boxes but it is of course still possible I am wrong. But as I have no feel for how much this should be, I don't really know! If this still seems really wrong then I will go back to the beginning and try again...

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15 minutes ago, Auntie Helen said:

If I put my UK rental income PROFIT in Anlage AUS line 36 (Nach DBA steuerfreie Einkünfte/Progressionsvorbehalt), which ended up as about 13.600 EUR, I end up with a total Nachzahlung of 1.400 EUR at the moment.

 

If I exclude it (delete the rental income from Anlage AUS, line 36), my current tax bill (still a few things to finalise) is -20 € with WISO (so a Rückerstattung of 20 EUR)

 

That means this rental income of 13.600 has increased my tax burden by 1.420 EUR. That's about 10% of the rental profit, although I am theoretically not being taxed on it!

(For info, my salary income in DE was just under 20k and I have a few other bits and bobs in there such as Behinderungsgrad, bank interest, shares profit etc but nothing else dramatic).

 

Does this 1.420 EUR still seem too high?

1,420€ is correct.

 

If you fill in 20000 taxable income and 13600 progression income into the official progression calculator, you get 1,430€: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

 

Screenshot_20220130-174747_Chrom.jpg.777

 

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Hooray!! Thanks Panda, it looks like I might just be beginning to get to grips with this. Your help has been fantastic!

 

Still waiting to hear back from the Bundesbank about my Reichsmark exchange rate - it's all giving me good copy for my blog though, "The travails of filling in a German Tax Return after Brexit."

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