Tax reduction – household services – craftsman services

A tax reduction in the form of a deduction from income tax can be claimed for expenses in connection with renovation, repair or modernization work in a private household or the maintenance of the associated property (see Section 35a (2) and (3) EStG).

Tax reduction is 20% of labor costs for highest possible tax reduction in a year:
– household-related services: e.g. cleaning, cleaning work in the home, garden maintenance such as lawn mowing, hedge trimming, etc., nursing and care services €4,000
– Craftsman services: Renovation, modernization and extension work by craftsmen, landscaping, repair or maintenance of heating, kitchen appliances, etc., chimney sweeping services € 1,200.

According to § 35a para. 4 EStG, the tax reduction is limited to services provided in the household. The “household” may also include several spatially separate places (e.g. second, weekend or vacation homes).

Services performed outside the boundaries of the property (e.g., winter maintenance or expenses for house connections) may also be eligible if the work is performed on adjacent public property, for example.

However, the term “in the household” is not to be equated with actual occupancy in every case. Thus, when moving to another apartment, not only the moving services and labor costs related to the “new” apartment, but also, for example, the renovation work on the previous apartment can be taken into account.

The tax reduction can be claimed not only by (co-)owners of an apartment, but also by tenants. This requires that the incidental expenses to be paid by the tenant include amounts that have been billed for favored household-related services and craft activities.

The share of the expenses attributable to the tenant must be shown in an annual statement or by a certificate (from the landlord or manager).

Handicraft activities in the context of a new construction projectare not eligible; this includes work that is incurred in connection with the construction of a household until its completion.

This means that, for example, labor costs for a subsequent attic conversion (also in the case of a usable/living space extension), for a subsequent new garden, for a subsequent construction of a carport, a prefabricated garage, a conservatory or a terrace roof, as well as for outdoor facilities such as paths, fencing, etc., are generally subject to § 35a para. 3 EStG are favored.

The prerequisite for the tax reduction is, among other things, that a corresponding invoice is available and the payment has been made non-cash (to the service provider’s account); this also applies to payments on account.

For the consideration of the tax reduction in the respective calendar year, it basically depends on the time of payment.

It should be noted in this context that any “credit surplus” is lost, i.e., the tax reduction cannot lead to a “negative” income tax; a credit for the excess amount cannot be made up in the following year either.

(Further comments & information on this can be found in our information letter 05/2018 under the item 4.)