(2024) What costs can landlords deduct for tax purposes during a vacancy?

Anyone renting out property in Germany must not only manage the rental, tenant selection, and support but also be prepared for vacancies. If a flat or house is vacant for a certain period, it can lead to financial losses. But what options are there to deduct expenses for temporary vacancies for tax purposes?

What are expenses for temporary vacancies?

Expenses for temporary vacancies include all costs incurred in connection with renting out property but cannot be covered by rental income due to vacancies. These include costs for maintenance and repairs, advertising, energy costs, property tax, and waste disposal fees. However, the vacancy must actually be temporary, meaning there must be a realistic chance that the flat or house will be rented out again.

Tax deductibility of expenses for temporary vacancies

Expenses for temporary vacancies can be deducted for tax purposes, but certain conditions must be met. Firstly, the costs may only arise if the property is rented out and no income is generated. Secondly, the costs must be necessary and reasonable, i.e., no luxury renovations or unnecessary maintenance work should be carried out.

The deductible expenses are claimed as income-related expenses under income from renting and leasing. They must be stated in the tax return for the respective year. When calculating income tax, they are then deducted from the rental income.

Overall, expenses for temporary vacancies can be deducted for tax purposes if they are necessary, reasonable, and actually incurred. However, landlords should ensure that the vacancy is indeed temporary and that there are realistic prospects of renting it out. If landlords have any uncertainties or questions about tax deductibility, they should consult a tax advisor.