Single-family house with undeclared granny flat

that's exactly what I said. "In my opinion, the loan costs are not shared. They amount to the total sum of the house." It's the same for me. Only mine are 1/3 of the living space.

Exactly there is, in my opinion, the catch. The tax office checks if it exists. According to the statement of the OP, however, probably not.

Basically, the intention to generate income applies in the Income Tax Act. Otherwise, it falls under hobby activities. But if you read §21 paragraph 2 ESt (in my post #15), you will see that there is an exception for the discounted rented apartment. >66% of the local customary rent is fully recognized without examination. Between 50% and 66% you have to prove that a permanent income arises over the term. Depending on the result, it is either fully recognized or divided into a paid and an unpaid part. Under 50% it is generally divided into a paid and an unpaid part. That means only the proportional advertising costs for the paid part can be applied. With 70%, the OP would be on the legally safe side.