New construction: Are craftsmen services tax-deductible after moving in?

Hello,

according to §35a of the Income Tax Act, there is the possibility to deduct labor costs for typical craft services for tax purposes (20% of the labor costs, up to a maximum of 1,200 EUR per year).

It is important that these works are carried out in/on a finished/existing household. How does this work in the context of a new building? All the necessary work for the house construction itself, such as plumbing, heating, electrical, plastering, and tiling, are part of our construction contract. These are of course not deductible since we will only use the house ourselves and will not rent it out.

We are now wondering how it looks for work on the house, for example (paving, driveway, terrace, fence, laying turf...). Does it make sense to carry out these works (as long as they are not absolutely necessary) a few months after moving in to establish an existing household first?

Hi,
it worked for us, but we only had the work done in the next calendar year.
For paving, for example, it is important that the area has already been gravelled beforehand, so that the area is basically already usable as a driveway. If you then have it paved later, §35a applies. If it has not been gravelled yet, it is still part of the house construction.
However, it also seems to be somewhat a matter of luck. For us, all craftsman services were approved like this and in return, questions were asked about other, completely absurd points in the normal income tax declaration.

Regards,

Andreas

We are now wondering how this looks, for example, with the work on the house (paving, driveway, terrace, fence, laying turf...). Does it make sense to have these works done only a few months after moving in (as long as they are not absolutely necessary), so that a household is first established?

Is the financial savings worth it if you still live in a construction site (at least outside)? With a €1,200 wage share and a marginal tax rate of 42%, you get a manageable amount back. So personally, I don’t find it worthwhile to wait extra for that. If for financial reasons the outdoor facilities are to be done later anyway, then of course.

Morning,
it worked for us, but we also only had the work done in the following calendar year.
When paving, it is important, for example, that gravel has already been laid beforehand, so the area is basically already usable as a driveway. If you then have it paved later, §35a applies. If it has not been gravelled yet, it is still part of the house construction.
But it also seems to be a bit a matter of luck. For us, all craft services were approved like that, and in return, other completely absurd points were questioned in the regular income tax return.

Regards,

Andreas

Thanks already for the practical experience!

We will move in September. Of course, it would be good to be able to enter the house somewhat dry-footed during the "nasty" autumn/winter months. On the other hand, things like garden, terrace, decent lawn, etc. only become interesting again in spring 2020.

Is the financial saving worth it if you still have to live in a construction site (at least outside)? With a wage share of €1,200 and a marginal tax rate of 42%, you will get a manageable amount back. So personally, I don’t find it worth waiting just for that.
If the outdoor facilities are going to be done later anyway for financial reasons, then of course.

We already had some landscapers on the property and got offers for our rough ideas (leveling the ground, driveway, double carport + paving walkway to front door/around the house, setting L-blocks for almost 60 m for the fence, terrace...).
We will probably end up at around €30,000 and I find a €2,400 tax refund (if we can split it over 2 years) quite helpful...

We recently discussed this with a friendly tax advisor. She said that basically the labor costs are deductible that arise after the house is in a habitable condition. So I assume that paving work etc. should be deductible without any problems. However, we will definitely do the next tax return with her support for safety reasons precisely because of such details.

The deduction of the labor costs shown on the invoice worked without any problems. Completion and occupancy 1.9.17. Everything that came afterward, paving, garden, plants, lawn, etc., was acknowledged by the [FA].