Field help
Spaces rented out as holiday flats
The result of the spaces rented out as holiday flats is automatically displayed here. The actual entries can be entered on the subpage.
Short-term leased space
The result of the short-term rented spaces (e.g. via Airbnb) is automatically displayed here. The actual entries can be entered on the subpage.
Is the property rented out in whole or in part to relatives for residential purposes?
Specify whether the property was rented to relatives in whole or in part.
Who is considered to be a relative?
According to sect. 15 of the Fiscal Code (AO), the following persons are considered relatives:
- Spouses or life partners
- Direct relatives by birth or marriage, for example, parents, grandparents, children and grandchildren
- Siblings
- Nieces and nephews
- Spouses or life partners of the siblings
- Sisters-in-law and brothers-in-law
- Uncles and aunts
- Fiancée
- Persons with a special close relationship, for example, long-term life partners with personal and economic ties
Tax audit in the case of rental to relatives
The tax office checks rentals to relatives particularly to ensure that the rental conditions are not unreasonable. The following rules apply:
- Rent at least 66% of the local market rent:
The rental is considered to be on a full-pay basis. Income-related expenses can be deducted in full.
- Rent below 66% but above 50% of the market rent:
The rental is considered a reduced-rate lease. A share of the income-related expenses is deductible. In addition, a total profit forecast is required.
Positive result: Full deduction of income-related expenses.
Negative result: Only a proportion of income-related expenses deductible.
- Rent below 50% of the market rent:
The rental is divided into a paid and a free part. Income-related expenses are only deductible for the paid part.
Example: The usual local rent is 1.000 Euro:
- If you rent a property for 700 Euro (70%), you can deduct the full amount of the income-related expenses.
- If the rent is 500 Euro (50%), the income-related expenses are taken into account proportionately.
- If the rent is less than 500 Euro, the income-related expenses are only deductible for the paid part.
... of which living and usable space rented out
This field displays the total space (in square meters) used for rental purposes. This includes all rented out residential and usable space in the property, such as living rooms, cellars, storage rooms, and garages that contribute to the income from rental and lease.
Area rented out for commercial purposes
Enter here the space allocated to the commercially used space.
This includes, among other things, space for
- commercial premises
- offices
- business premises,
- production spaces,
- medical practices.
... rented out to family members?
Indicate whether you have rented part of the property or all the property to relatives free of charge.
The tax office examines renting to relatives in detail.
Previously applied: If the rental income is at least 66% of the local rent (incl. allocations), the transfer is fully paid and the income-related expenses are generally recognised in full by the tax office.
If, on the other hand, the actual rent is less than 66% of the usual local rent, this is considered to be a discounted or partially discounted transfer. In this case, the tax office only recognises the income-related expenses on a proportional basis, i.e. in the ratio between the actual rent and the standard local rent.
As of 1 January 2021, there is an important change:
- If the agreed rent is at least 66% of the local market rent, the expenses are fully deductible as income-related expenses.
- If the agreed rent is between 50% and 66% of the market rent, the intention to generate income must be examined and an income prediction is required for this purpose:
- If the income prediction is positive, the income-related expenses are fully deductible.
- If the income prediction is negative, the income-related expenses are to be divided and only deductible proportionally.
- If the agreed rent is less than 50% of the local market rent, the transfer of use is to be divided into a paid and a free part. The expenses are only deductible as income-related expenses in proportion to the paid part.
Important: If the rent is at least 50 percent but less than 66 percent of the local rent, a total profit prediction test (Totalüberschussprognoseprüfung) must be carried out:
If this examination of the total profit prediction is positive, the intention to generate income is to be assumed with respect to the discounted renting of the living space and the full deduction of income-related expenses is possible.
If, on the other hand, the total profit prediction test leads to a negative result, an intention to earn income is only to be considered for the part which is rented out for payment. The income-related expenses may be deducted proportionately for the part rented out for payment.
The total profit prediction test for income from renting and leasing is carried out according to long-standing and consolidated Federal Fiscal Court (Bundesfinanzhof, BFH) case law. The Federal Ministry of Finance (BMF) letter of 8 October 2004 (BStBl 2004 I p. 933) is still relevant.
Was the property partly owner-occupied or rented out free of charge?
Please specify whether the property was partially owner-occupied or rented out free of charge.
You do not have to provide any information in your tax return for buildings and parts of buildings that you use exclusively for your own purposes. You can remove the object in the "Rental objects" section!
What does "use for own purposes" mean?
If you or your family have lived in the property or part of it, it is considered to be "partially used by the owner". You cannot earn any income from the owner-occupied part and therefore cannot deduct any income-related expenses.
Example: You live on the first floor of your property, while the upper floor is rented out.
What does free of charge rental mean?
If you make the property (or part of it) available to other persons without charging rent, it is considered to be "rented out free of charge". As a rule, no income-related expenses can be claimed for parts that are rented out free of charge.
Example: You provide your children with a flat in the house without charging rent.
Space used by the owner or provided free of charge
Enter here the living space that is allocated to owner-occupied residential space.
Important: For buildings and parts of buildings used exclusively for own residential purposes or own commercial/professional purposes, it is not necessary to fill in "Form V".
... rented out for a short term?
Specify whether the apartment was let out on a short-term basis e.g. via internet platforms such as Airbnb, Wimdu or 9flats.com.
Important: Even those who rent the rooms of their self-used flat or house to third parties regularly earn income from rental and leasing according to section 21 Income Tax act (EStG) (BFH judgement of 4.3.2008, Ref. IX R 11/07)
