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]

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 424 times

*******************************************************************************************************************************

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.

[cj1]

Thank you Panda, very nice of you

[Sam-I-Am]

So now I'm completely confused!

Similar to OP: Employed, DE tax resident. Filling in declaration for 2024 and including rent from UK.

Without UK rental income my return projection (using SteuerGo) is a tax refund of €600. When I add rental income of £9000 I am supposed to pay an additional €800 additional German tax payment due to this UK rental income.

Similar to OP the rental income is below UK tax threshold (also declared in UK). Due to DTA etc why do I also have to pay so much added tax in Germany?

1. Is this because my global income is now higher so Germany tax me more on my German income
2. Did I miss something and am declaring too much UK rental income?

If 1. then this is a nasty surprise but I'll just have to swallow it
If 2. is this because I'm not taking account of building 'depreciation? That is the part that confuses me.

Edited: Does 'depreciation' start from when I bought the flat in which case I include paid price, lawyer fees etc or does it start from when the building was built in which case I can't use depreciated to help reduce income number)

Background. 1 bed flat was bought in 2013 for £220,000, it's a really old flat, built very early 1900's and I have no idea what it's worth now. I already deducted yearly Ground Rent and Building Maintenance costs from the rental income amount leaving approx. £9,000 as pure income.

Do I really have to figure out what the exchange rate was in 2013 and figure out depreciation and that stuff?

[PandaMunich]

Similar to OP: Employed, DE tax resident. Filling in declaration for 2024 and including rent from UK.

Without UK rental income my return projection (using SteuerGo) is a tax refund of €600. When I add rental income of £9000 I am supposed to pay an additional €800 additional German tax payment due to this UK rental income.

Similar to OP the rental income is below UK tax threshold (also declared in UK). Due to DTA etc why do I also have to pay so much added tax in Germany?

1. Is this because my global income is now higher so Germany tax me more on my German income
2. Did I miss something and am declaring too much UK rental income?

Mainly the former.
But you do also need to subtract the 2.5% depreciation (since the building was built before 1925) from your UK rental profit, which will bring the extra German income tax that will be due down by a bit, but not by much.

Edited: Does 'depreciation' start from when I bought the flat in which case I include paid price, lawyer fees etc or does it start from when the building was built in which case I can't use depreciated to help reduce income number)

From the date you bought it.

Background. 1 bed flat was bought in 2013 for £220,000, it's a really old flat, built very early 1900's and I have no idea what it's worth now. I already deducted yearly Ground Rent and Building Maintenance costs from the rental income amount leaving approx. £9,000 as pure income.

If you are paying "ground rent" then it is leasehold (Erbpacht) which means that what you paid in 2013 was just for the building (you did not get to buy any land, you are paying rent on the land every year), which in turn means that you get to claim as a rental expense 2.5% per year of 100% of the:

• loaded purchase price = 220,000 GBP + solicitor fee + stamp duty + land register fee + any other fees associated with the purchase

Do I really have to figure out what the exchange rate was in 2013 and figure out depreciation and that stuff?

Yes.

The ECB website has the historical GBP/€ exchange fee for the date of your purchase in 2013: https://www.ecb.europa.eu/stats/policy_ ... ex.en.html

2025-01-26 17_29_53-Euro foreign exchange reference rates.jpg (66.72 KiB) Viewed 166 times

[Sam-I-Am]

Thanks Panda... I don't know what we'd do without you