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“Concession (rental) of a dwelling.”

Renting an apartment

When renting out an apartment, e.g. to children, parents or siblings for residential purposes, care must be taken to ensure that the rental agreement corresponds to what is customary between strangers and that the agreement is actually executed in this way (e.g. through regular rent payments and utility bills).

If this is not the case, the rental relationship as a whole will not be recognized, in particular with the consequence that income-related expenses associated with the rental cannot be claimed.

66% of the local rent

In the case of a discounted rental, it must also be noted that a so-called remuneration limit must be complied with if the deduction of income-related expenses is to be maintained at the full amount: If the agreed rent is at least 66% of the local rent, a full deduction of income-related expenses is regularly possible (§ 21 para. 2 EStG).

If, on the other hand, the agreed rent is less than 66% of the market rent, the tax office assumes that the rental is partially paid and reduces the income-related expenses (pro rata).

The local market rent comprises the local cold rent plus the costs apportionable in accordance with the Operating Costs Ordinance (so-called warm rent).

The remuneration limit also regularly applies when renting out an apartment to strangers. The tax authorities also make a (pro rata) reduction of the income-related expenses if it is not possible to increase the agreed rent for legal or factual reasons in order to comply with the above-mentioned limit.

It is recommended to regularly review affected leases and adjust the rent if necessary.