Construction of a granny flat, financing + tax benefits, how to proceed?

Could someone briefly explain again why separate loans are needed? Is a simple division based on percentage of living space not possible?

Thanks

The general basic allowance. With a small rental apartment, the income from renting and leasing after deducting expenses will certainly not be very high. There probably won’t be much to tax at the end of the year. Or do you see it differently as an expert?

As a rule, however, there is usually another income (e.g., non-self-employed income). Therefore, the basic allowance is already used up. For the decision whether to rent or not, the marginal tax rate is more decisive. For most people here, it is likely around 35-40%.

Could someone briefly explain again why separate loans are needed? A simple allocation based on the percentage of living space does not work?

Thanks

Separate loans are useful for optimizing the deduction of interest expenses for rental and leasing.

Example
Total house cost 500K€

Equity 100K€
Debt 400K€ Interest 2%

Usage: 50% own use, 50% rental

Without separate loans, only 50% of the interest can be allocated to the rental portion (4K€).
By assigning the loans 150K€ to own use and 250K€ to the rented portion, the full 2% on 250K€ can be allocated as interest expenses to the rental portion (5K€). This results in a tax saving of 350€ with a marginal tax rate of 35%, for example.
If the loan for the owner-occupied portion is repaid first, this effect increases in the following years.

I did some more research. To be 100% sure, the mixing of payment flows should apparently be avoided by using separate construction accounts. At least, this is a recommendation from the IWW from 2002. In 2009, there was a slight relaxation of this rule regarding the mixing of payment flows in connection with the purchase of real estate with fixed purchase prices for the individual apartments. However, this does not apply to you. To what extent this has been further relaxed over the years in the production of objects by any rulings, I cannot say.

Thank you very much for the detailed explanation. I will probably consult a tax advisor again to avoid making any serious mistakes.

However, in our case, the division between main residential unit and granny flat is about 80/20, and the granny flat is rented to my employer as an office. Due to the smaller share of the total volume, the difference in your example calculation should actually shrink, right?

Oh dear, so a granny flat must meet criteria.. with KfW and ventilation, even separate ventilations. I don’t think it’s as simple as you imagine.