What conditions must I meet to deduct the costs of a second household?
If your place of work is far from your home and you therefore need to take a second home, this constitutes a dual household. Certain costs incurred as a result can be deducted from your taxes.
However, certain conditions must be met: Firstly, you must have a main home with your own household at your place of residence. You must also take a second home at your place of work for professional reasons. A new condition for "own household" since 2014 is the financial contribution to living expenses.
Professional reasons exist, for example, if you have been transferred to an external place of work or if you take up a job that is far away from your own home. The dual household is also considered to be for professional reasons if you move your main residence away from your workplace for private reasons and use a flat at your place of work as a second household.
Any accommodation where you have the possibility to stay overnight is recognised as a second home. How often you use this possibility is irrelevant. Accommodations can include:
- a rented flat,
- your own house,
- a hotel room,
- overnight stays with friends, or
- a barrack on a construction site.
If you drive home several times a week, you can choose whether to deduct costs for dual household or travel expenses for all home trips. In the second case, travel expenses can be deducted using the distance allowance. However, you cannot then deduct overnight costs and meal allowances as business expenses in the first three months. The second option is advisable if you frequently travel home and have low overnight costs at your second home.
(2022): What conditions must I meet to deduct the costs of a second household?
When do I have my own household?
A prerequisite for the tax recognition of a second household is that you maintain your own household at your place of origin. The household is a furnished flat that forms your centre of life and where you maintain your household. You must use the flat as an owner, tenant, or through a joint or derived right of use (e.g. sharing your partner's flat). For married couples, the own household is usually always where the family lives.
If you are single, the recognition of your own household plays an important role in the deductibility of costs for a second household. It is not sufficient if you occupy a room in your parents' house or flat, even if you contribute to the rent. What is necessary is your own furnished flat, used as an owner, tenant, or subtenant. You must maintain a household there, i.e. determine or significantly co-determine the household management. If you can prove at least two journeys home per month, it is generally assumed that this is your centre of life. Since 2014, it has been required that you contribute financially to the cost of living in your own household.
(2022): When do I have my own household?
What can I deduct for second homes?
The tax office does not impose strict requirements on the employee's second home at the place of work. This can be a flat, a hotel room, or a furnished room. The frequency of use does not matter; the accommodation must simply be available. However, the second home must not become the new main place of residence, as this would end the tax benefits. If these conditions are met, various work-related expenses incurred due to maintaining a second household can be claimed for tax purposes.
This starts with the search for accommodation. Expenses incurred during the search, such as travel costs for viewing properties, telephone, or postage fees, can be deducted as work-related expenses. The tax office also recognises moving costs. These include transport costs for a removal company or rental vehicle and travel expenses on the moving day.
In the first three months of maintaining a second household, meal allowances can even be claimed. The amount of the allowances depends on the duration of absence from the main home. They are:
- 24 hours: 28 Euro
- 8 to 24 hours: 14 Euro
For travel expenses, the first journey there and the last journey back are fully recognised, e.g. by ticket. Alternatively, if a car is used, the general mileage allowance of 30 cents per kilometre can be applied. Weekly trips home are recognised with the distance allowance of 0.30 Euro per kilometre (or 0.38 Euro from the 21st km).
Accommodation costs or the costs of the second home can also be deducted as work-related expenses. Only proven costs, no flat rates, are recognised.
Since 2014, the deductible amount in Germany has been limited to a maximum of 1.000 Euro per month. This maximum amount includes all expenses for the accommodation or flat that are borne by the employee, in particular:
- Rent including service charges, also for a furnished flat,
- Purchase costs for necessary household and furnishing items,
- Second home tax,
- Renovation, etc.
The maximum amount of 1.000 Euro applies monthly and as an average value for the entire year. If the expenses are less than 1.000 Euro in some months and more than 1.000 Euro in other months, the excess amounts can be offset against the unused maximum amounts.
The Federal Fiscal Court has recently ruled against the tax authorities that the costs for the necessary furnishing of the second home in the context of a work-related second household do not count as accommodation costs, the deduction of which is limited to 1.000 Euro per month. Rather, expenses for furnishings and household items - insofar as they are necessary - are fully deductible as other necessary additional expenses due to maintaining a second household in accordance with § 9 Abs. 1 Satz 3 Nr. 5 EStG (BFH ruling of 4.4.2019, VI R 18/17).
- According to the BFH, expenses for furnishings and household items are not covered by the maximum amount, as these are incurred for their use and not for the use of the accommodation. The use of the furnishings is not the same as the use of the accommodation itself. The legislative aim of the new regulation is to limit only the costs for the accommodation to 1.000 Euro per month, not other necessary expenses.
- The maximum deductible amount of 1.000 Euro per month includes, according to the explanatory memorandum to the law, "all expenses incurred for the accommodation or flat, e.g. rent including service charges, rental or lease fees for parking spaces, also in underground garages, expenses for special use (such as garden, etc.) borne by the employee". The amount of 1.000 Euro is based on "a flat of approximately 60 sqm, which is average in terms of location and equipment, as previously always used by case law".
Tip: If the second home is owned by the employee, the actual expenses, e.g. depreciation, interest on loans, operating costs, repair costs, can be deducted as work-related expenses up to the maximum amount of 1.000 Euro per month. Here too, the costs for necessary furnishings and household items can be deducted in addition to the maximum amount (BMF letter of 24.10.2014, BStBl. 2014 I p. 1412, para. 103).
Tip: When using a furnished or partly furnished flat, a higher rent is generally payable. If the rental contract does not specify a breakdown of the rent for the use of the flat and the use of the furniture - as is usually the case - the rent paid can be apportioned on an estimated basis according to § 162 AO. The use of the flat is then deductible up to 1.000 Euro per month and the use of the furniture is deductible beyond that (BFH ruling of 4.4.2019, VI R 18/17).
Tip: The Saarland Fiscal Court has recently ruled that the costs for a rented parking space or garage do not count as accommodation costs and are therefore not subject to the 1.000 Euro limit. They can therefore be deducted even if the rent for the flat is already so high that the limit is exceeded (court order of 20.5.2020, 2 K 1251/17).
Currently, the tax authorities have announced a welcome simplification rule: If the purchase costs for the furnishings and equipment of the second home - excluding work equipment - do not exceed 5.000 Euro including VAT in total, it is assumed for simplification purposes that these costs are considered "necessary" or not excessive and are recognised as work-related expenses without further examination (BMF letter of 25.11.2020, BStBl 2020 I p. 1228, para. 108).
Tip: The Munich Fiscal Court has recently ruled against the tax authorities that expenses for the second home tax do not count as accommodation costs, which can be recognised as work-related expenses up to a maximum of 1.000 Euro per month. Rather, the second home tax can be recognised additionally as "other expenses" in the context of maintaining a second household (FG Munich of 26.11.2021, 8 K 2143/21).
(2022): What can I deduct for second homes?
