Bauexperte
2011-04-01 12:56:06
- #1
Old Building Renovation: Tax Relief under § 10f Income Tax Act Does Not Apply to New Constructions (FG)
03.2011 | Jurisdiction
According to a ruling by the FG Berlin-Brandenburg, tax relief under § 10f Income Tax Act can only be claimed if such expenses relate to already existing residential space, but not for new construction.
Background:
Expenses for modernization and repair measures that lead to manufacturing or acquisition costs of a used for own residential purposes building or a residential unit in a redevelopment area or urban development area are given special tax relief under § 10f Income Tax Act. They can be deducted from the total income as special expenses over a period of 10 years totaling 100%, or 90% for construction starting from 2004, thereby reducing the taxable income.
In the case decided, the taxpayer purchased a condominium in a more than one hundred-year-old multi-family house that was renovated and whose apartment stock was divided into individual condominiums. The residential unit acquired by the taxpayer was newly constructed during the renovation of the old building in its previously undeveloped attic. The taxpayer requested the granting of the special relief for the renovation expenses incurred on the building insofar as they were allocated to his apartment according to his calculations. The tax office partially granted this request, but not to the claimed extent. The purchaser then filed a lawsuit with the tax court.
Decision:
However, the judges held the view that there is no entitlement to the tax renovation relief due to the existence of a newly constructed residential unit and dismissed the lawsuit. The relief already granted to the taxpayer – which the court considered to have been wrongly granted – remains in place, however, because the tax court is not allowed to worsen the situation of a plaintiff, i.e., the plaintiff must not be at a disadvantage after the tax court decision compared to before filing the lawsuit.
(FG Berlin-Brandenburg, judgment of 11/17/2010, 2 K 3060/06 B)
Note: The tax court has admitted the appeal to the Federal Fiscal Court.
Source: Haufe.Taxes
03.2011 | Jurisdiction
According to a ruling by the FG Berlin-Brandenburg, tax relief under § 10f Income Tax Act can only be claimed if such expenses relate to already existing residential space, but not for new construction.
Background:
Expenses for modernization and repair measures that lead to manufacturing or acquisition costs of a used for own residential purposes building or a residential unit in a redevelopment area or urban development area are given special tax relief under § 10f Income Tax Act. They can be deducted from the total income as special expenses over a period of 10 years totaling 100%, or 90% for construction starting from 2004, thereby reducing the taxable income.
In the case decided, the taxpayer purchased a condominium in a more than one hundred-year-old multi-family house that was renovated and whose apartment stock was divided into individual condominiums. The residential unit acquired by the taxpayer was newly constructed during the renovation of the old building in its previously undeveloped attic. The taxpayer requested the granting of the special relief for the renovation expenses incurred on the building insofar as they were allocated to his apartment according to his calculations. The tax office partially granted this request, but not to the claimed extent. The purchaser then filed a lawsuit with the tax court.
Decision:
However, the judges held the view that there is no entitlement to the tax renovation relief due to the existence of a newly constructed residential unit and dismissed the lawsuit. The relief already granted to the taxpayer – which the court considered to have been wrongly granted – remains in place, however, because the tax court is not allowed to worsen the situation of a plaintiff, i.e., the plaintiff must not be at a disadvantage after the tax court decision compared to before filing the lawsuit.
(FG Berlin-Brandenburg, judgment of 11/17/2010, 2 K 3060/06 B)
Note: The tax court has admitted the appeal to the Federal Fiscal Court.
Source: Haufe.Taxes