Buy an apartment for the parents?

Thank you for the tips and the positive feedback. I’m glad that buying the apartment myself doesn’t seem to be a pipe dream. We will then start looking for concrete offers.

Good evening Danii, the consideration is not bad. The income also easily allows such financing for you. just a few notes: if the parents move in there, the tax office sees it as rental. That means even if you don’t charge them rent, or less. You are allowed to be up to 20% below the rental index. The tax office will set this as the minimum rent (even if you internally charge less). Therefore, it would make sense here: to finance as much as possible (because the interest is calculated against the rental income = tax-reducing effect). Another depreciation possibility is the AfA of 2% on the apartment value (without land, i.e. that will be deducted from the €300,000).

Moin Moin, unfortunately there is quite a bit wrong in this section. 1. Advertising costs are deductible proportionally if the rent is less than 66% of the local customary rent. If it is for example 70%, 100% of the deductible costs can still be claimed. If the rent is 50%, only 50% of the deductible costs can be claimed accordingly. 2. There is no law or regulation according to which the tax office calculates a fictitious rent in case of gratuitous use. So if the apartment is handed over to the parents by the tenant free of charge, this is purely the tenant’s private pleasure. Only if the tenant tried to claim the costs (AfA, interest on loans, incidental costs etc.) as a loss on Annex V would the office check and then possibly allocate. But since the rent would then be 0% (0€ of €850 usual rent), the costs would be considered at 0%, which would then neither be a profit nor a loss. German tax law is unfortunately the most complicated worldwide, but sometimes it’s actually quite simple. Regards

The discussion about the fictitious rent took place only recently in another thread. It could not be concluded there, several people claimed to know it, but were not in agreement.

I have been working at the tax office for over 13 years and a fictitious rent does not exist. No one will find this point in the Income Tax Act in §21.

"The facts of § 21 Income Tax Act are fulfilled by anyone who, in particular, lets a developed property to another person (partly) for payment. Gratuitous use, on the other hand, does not fulfill the facts of § 21 Income Tax Act. Whoever lets an apartment to another person completely free of charge cannot (in this respect) claim any advertising expenses."

That should be clarification enough now.

Regards

I would buy

I can only agree.

Danii mentioned that she receives rent from her parents, which will definitely be below €850!

I just wanted to point out that one should be careful about how high it should be; with your hints, however, one can get a better picture to see what the "minimum rent" should be to be able to fully deduct the costs!

Because if it is above 66% = 100% deductibility (probably no profit = no taxes)
at 60% = 60% deductibility = additional taxes to pay!