Offsetting Familienversicherung income limits

[kiplette]

Ok, after many years of only just breaking even with my rental house in the UK (or not), this year the tenant has been paying his rent every month (that's a first!) and my Premium Bonds won a 5000 quid prize. (My intention was to cash them in and buy them for Paps instead, but I just didn't crack it off before they laid unexpected golden eggs...they are now gone)

This brings me way over the limit for being Familienversichert through Paps' KK (for which he pays through the nose). Unless the tenant defaults for the rest of the year, but the agent is unlikely to buy into that plan

So my question is whether I can get some stuff done on the house in the UK to offset the income from the premium bonds, or whether that's not going to work? It has a horrible mould problem in a wardrobe which I have been trying to suggest needs fixed, or I can make the fence higher or put some new windows in - many projects are possible.

My slight understanding from another thread is that tax-wise, you can't necessarily offset one thing against another, but for the KK? I think it's total income suggesting that a nice loss on the house would cancel out the Bond gold.

[PandaMunich]

So my question is whether I can get some stuff done on the house in the UK to offset the income from the premium bonds, or whether that's not going to work? It has a horrible mould problem in a wardrobe which I have been trying to suggest needs fixed, or I can make the fence higher or put some new windows in - many projects are possible.

My slight understanding from another thread is that tax-wise, you can't necessarily offset one thing against another, but for the KK? I think it's total income suggesting that a nice loss on the house would cancel out the Bond gold.

Actually for repairs of rental object, the default is that you claim the entire cost immediately, i.e. all you spent that year on the property would lower your rental profit.
But most people prefer to spread the cost for 2 to 5 years, as is permitted by § 82b (1) Satz 1 EStDV: https://www.gesetze-im-internet.de/estd ... __82b.html

• (1) 1Der Steuerpflichtige kann größere Aufwendungen für die Erhaltung von Gebäuden, die im Zeitpunkt der Leistung des Erhaltungsaufwands nicht zu einem Betriebsvermögen gehören und überwiegend Wohnzwecken dienen, abweichend von § 11 Abs. 2 des Gesetzes auf zwei bis fünf Jahre gleichmäßig verteilen.

• (1) 1The taxpayer may spread major expenses for the maintenance of buildings which are not part of business assets at the time the maintenance expense is incurred and which are predominantly used for residential purposes over two to five years in derogation of Section 11 (2) of the Act.

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The only exception would be if you spend more than 15% of the purchase price within the first 3 years after the purchase date renovating it.
In that case, what you spent, gets added to the cost of the house and gets depreciated over 50 years (over 40 years if the house is from 1924 or earlier), this is called "anschaffungsnahe Herstellungskosten": https://www.haufe.de/recht/deutsches-an ... 48786.html

But this doesn't apply to you, you have already owned the property more than 3 years, so spend away

[kiplette]

That's great, thank you, Panda.

[Emkay]

That's great, thank you, Panda.

Congratulations on your win! I’m still on £25 for this year. I also need to spend a bit extra this year on my UK rental lest I tip over the KK limit. It’s so borderline. Finding an exterior decorator able to paint between UK rain is quite difficult.

What energy efficiency is your property? If I remember correctly, there was mention of the minimum rental limit being changed from E to C. On hold now I think though a possible in between measure being E to D. Unless you’re already at C, it might definitely be worth getting the windows changed or if they are in bad condition. Mine were and I spent £5k a few years ago on 10 smallish windows.

Here’s a basic Google….
https://www.hose-rhodes-dickson.co.uk/d ... ent-homes/

Anything else energy efficiency related might be worth considering. Maybe ask your agent if there’s anything else mandatory on the horizon for landlords.

Re existing mould….I’d say definitely get that fixed. Could spell awful problems if your tenant gets ill.

[kiplette]

Thanks for that link, emkay. I have already asked the agent for her thoughts, hopefully if anything is coming up for landlords, she'll factor that in.

I think from what you say, mould first, then windows.

Have you had any kind of energy survey done on your property? It's free first go here, but I've no idea about that in the UK. Maybe another question for the agent.

[Emkay]

Thanks for that link, emkay. I have already asked the agent for her thoughts, hopefully if anything is coming up for landlords, she'll factor that in.

I think from what you say, mould first, then windows.

Have you had any kind of energy survey done on your property? It's free first go here, but I've no idea about that in the UK. Maybe another question for the agent.

I believe that the EPC is valid for 10 years. The agent last charged me around £100, carried out by an independent surveyor. The report stated various measures to improve energy efficiency. Even simple things like energy efficient light fittings/bulbs.