Feasibility single-family house + land 550k-600k NRW

2020-04-02 08:04:33

If you use the money to build an apartment/house in order to rent it out and generate income/profit, you can of course deduct the interest on the loan. If you use the money purely for private purposes, it is not possible. Are we talking past each other the whole time? This is all about exactly what you write in the first paragraph. Your second paragraph is a different matter, because the money is used to create living space that will generate income in the future. I never wrote that interest related to investments which will generate profits/income in the future would not be deductible. You misunderstood something there.

2020-04-02 08:24:04

My claim is:

If I buy/have an object A as a capital investment, I can pledge it and deduct the interest for tax purposes (overall, of course, there must be a profit). It does not matter whether I have enough equity for object A - if I pledge it, there is an economic connection between object A and the interest on the loan for object A.

Whether I buy an object B for rental, for personal use, stocks, a flashy car, or whatever with my remaining/arising free cash is my own decision and has nothing to do with the tax consideration of object A.

If the second paragraph is not correct, I would appreciate an explanation of which investments are permissible and which are not.

2020-04-02 08:49:07

It depends solely on the use of the loan. This is also stated quite clearly in the judgment.

The difference is simple. If you buy Object A and use the loan for this purchase, there is an economic connection. In the second case, you already own the object and it is fully paid off. Now you take out a loan and mortgage the house to get better conditions and use the money for private purposes. There is no economic connection in the use of the money here. Otherwise, millions of private landlords could mortgage their rental properties to the limit, spend the money privately, and claim the interest for tax purposes. This works in Switzerland because loans on private houses are tax-deductible there in the tax return, but not in Germany.

2020-04-02 09:52:49

Oh dear Romeo, tax law and you will probably no longer be friends.

However, if you are still so sure that your construct is deductible contrary to any tax principles, you are welcome to send me either your tax ID or your name including date of birth via PM and I will endeavor to initiate an audit ex officio or an assessment close to business.

Then, after an unsuccessful objection, you can take legal action and the principles of tax law will be explained to you again by the respective judges.

By the way, I often encounter such cases in my professional practice.
Self-employed persons and companies quite like to play the game of taking out loans secured by various assets to finance their private lifestyle.

2020-04-02 10:03:39

Hi,

this was just quickly pulled together between the door and the hinge.
Here, a rental residential property was also mortgaged to build a private home.
File number IX B 134/08

Brief summary:
The loan debt must actually be taken out and used to generate income.
The temporal and economic connection is also missing.
Otherwise, any landlord could repeatedly mortgage a rented property and subsidize private enjoyment with it. It's logical that this is not allowed.
The mortgage is only used to get a better interest rate or to get the loan at all. It always depends on the usage.

By the way, there is no legal director in the tax office.
If you mean a retired head, in 90% of cases these are the people with at least some tax knowledge, since they only manage the office and make personnel decisions. They have almost nothing to do with tax matters.

Thanks for saving me the work!

2020-04-02 10:45:10

But if you are still so sure that your construct is deductible contrary to any tax principles, you can either send me your tax ID or your name including date of birth via private message and I will try to initiate an official audit or a business-related assessment.

In my personal construct, the financing of property A (capital investment), taken out when purchasing property A, served this purpose, although there was also sufficient equity available to finance a renovation of property B (also a capital investment) with the equity capital, as it is significantly harder to mortgage (historical preservation). I am quite sure, after all consulting, that I have nothing to fear here.

Nevertheless, I would still be interested in the legal justification for the unequal treatment of person A and B from #45 from the financial officers present here. Unfortunately, this has not yet been addressed.

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Feasibility single-family house + land 550k-600k NRW

Wiesel29

RomeoZwo

Wiesel29

Isokrates

Aphrodithe

RomeoZwo