UK property income in German tax return

[aerosmudge]

Hello everyone,

I have a question regarding putting my UK property income into my German tax return (I couldn't find a thread on this topic but if there is one I will delete this).

From my understanding of what I have found over the last few years' I have done the following (fictitious figures):


Income calculation

Rent per month = GBP 850 (below personal allowance in UK of GBP 12,750 so no tax to pay there)
Exchange rate per month * 850 = EU income
Source -
https://www.bundesfinanzministerium.de/ ... kurse.html

Total income = EU 12,000



Costs/Outgoings

Depreciation:
House bought in 25.09.2003
House price + Lawyer + estate agent = GBP 170,000
GBP/Euro exchange rate in October 2003 = 0,69693
Source -
https://www.bundesbank.de/resource/blob ... s-data.pdf


Cost in Euro - GBP 170,000 / 0,69693 = EU 243,926

House cost at 80% = EU 243,926 * 0.8 = EU 195,141
Source -
https://helfer-in-steuersachen.de/index ... nwert.html

Depreciation at 2% = EU 195,141 * 0,02 = EU 3902.83


Expenses:
Per month: (Mortgage interest + repair costs)*Euro exchange rate
Total for year = EU 6,200


So:
Income - EU 12,000
Costs - EU 6,200
Depreciation - EU3902.83

Total = 12,000 - 6,200 - 3902.83 = EU 1,900 (approximately)

This is then the figure I will put into line 36 Anlage AUS


My questions are:
1. Is what I have done still correct?
2. Can I claim for all of the mortgage interest or only some of it? In the UK now it is only 20%
3. Do i still need to do all of this if I made a loss last year (due to house renovations)?

Thanks in advance!

Smudge

[PandaMunich]

1. Yes.
2. All of the mortgage interest.
3. Yes, since you will create a loss that will be carried forward and which will reduce your UK rental profit in a future year.
   In case of a loss that year, please enter it into the column "nicht ausgleichsfähige Verluste" in the section "Nach DBA steuerfreie negative Einkünfte i. S. d. § 2a Abs. 1 EStG" of the form Anlage AUS: https://www.steuertipps.de/finanzamt-fo ... nd-steuern

[aerosmudge]

That's great, many thanks Panda!

[Alberto]

Isn't the depreciation only for the first 20yr?

[PandaMunich]

Isn't the depreciation only for the first 20yr?

The depreciation period is:

• 33.333 years, i.e. 3% per year if the building was built in 2023 or later.
• 50 years, i.e. 2% per year for buildings built between 1925 and 2022.
• 40 years, i.e. 2.5% per year for buildings built in 1924 or earlier.

This is laid down in § 7 (4) Nr. 2 EStG: https://www.gesetze-im-internet.de/estg/__7.html

[cj1]

Sorry to hijack this thread a bit...

And what if I have an investment property in Spain and I have already paid tax there at 19%
Do I still declare this on my DE tax return? Thanks

[PandaMunich]

https://www.bundesfinanzministerium.de/ ... onFile&v=1
And what if I have an investment property in Spain and I have already paid tax there at 19%
Do I still declare this on my DE tax return?

Yes, since the double taxation agreement (DTA) that Germany has with Spain is the exception in that it has a tax credit clause for rental profit in article 22 (2) b) vii): https://www.bundesfinanzministerium.de/ ... onFile&v=1

• b) Spanish tax paid under the laws of the Kingdom of Spain and in accordance with this Agreement shall be credited against the German tax on the following income or assets located in the Kingdom of Spain, subject to the provisions of German tax law on the crediting of foreign taxes:
  
  (vii) income from immovable property (including income from the disposal of such property) or the assets to the extent that such property does not effectively belong to a permanent establishment in the Kingdom of Spain.

This means that yes, you also have to calculate your Spanish rental profit in your German tax return, in Anlage V, where it gets calculated according to German rules.

You also declare the resulting Spanish rental profit in Anlage AUS, e.g. if the result of this Anlage V was 3,456€ for your let flat in Barcelona and you had paid 570€ Spanish income tax (because calculated according to Spanish rules, your Spanish rental profit was only 3,000€ and you had paid 19% Spanish income tax on it), you fill in:

2025-01-21 22_49_44-aav_anlage_aus_2024.pdf - Adobe Acrobat Pro.jpg (193.57 KiB) Viewed 30 times

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All other DTA that Germany has with other EU countries have a progression clause which because of § 32b (1) Satz 2 Nr. 3 EStG means that that the rental profit from those EU countries does not appear at all in the German tax return.