Which renovation costs are tax-deductible
Property owners who invest in the modernization or renovation of their property can in many cases claim part of the costs against tax. The ability to deduct renovation costs depends on several factors, including the type of property, its use and the scope of the measures.
Maintenance or modernization - what makes the difference?
In principle, the tax office differentiates between pure maintenance measures and value-enhancing modernizations. While maintenance work such as replacing a defective heating system or renewing the façade can be tax-deductible immediately, comprehensive modernizations are often depreciated over several years.
Measures that do not directly increase the value of the property, but are necessary for its maintenance, can often be recognized directly as income-related expenses or operating expenses. These include
Repairs to roofs, facades and windows
Renewal of heating systems
Maintenance and replacement of sanitary facilities
Modernizations that significantly increase the residential value of the property, such as an extension or an increase in energy efficiency, usually have to be depreciated over several years. Individual tax advice is useful here in order to take advantage of the best possible deductions.
What tax advantages are there for energy-efficient renovations?
Measures to improve energy efficiency, such as the installation of a new heat pump or façade insulation, are particularly worthwhile. The state promotes such measures with tax breaks and grants. For example, owners can deduct up to 20 percent of the costs of energy-efficient renovations from their taxes over three years.
Tax benefits for landlords and owner-occupiers
Landlords have particularly great advantages, as they can deduct refurbishment costs directly as income-related expenses. Although owner-occupiers cannot claim income-related expenses, they benefit from tax reductions for tradesmen's services or energy-related modernizations.
Conclusion
Refurbishment costs can be claimed against tax in many cases - provided they are declared correctly. While maintenance work is immediately deductible, major modernizations often have to be written off. Owners should find out about their options at an early stage and, if necessary, consult a tax advisor in order to get the most out of their investment.
©
