RENTAL PROPERTY. HOW IT IS BEST FROM THE POINT OF VIEW OF TAXES AND LEVIES

RENTAL PROPERTY. WHAT’S BEST FROM A TAX AND TAX DEDUCTION PERSPECTIVE The FO plans to buy 3 rental apartments. The purchase price is EUR 200 000 incl. VAT/apartment. The rent will be 850 EUR/apartment including energy. Costs assume (apartment/month):
➡️ Energy: 200 EUR;
➡️ Insurance: 10 EUR;
➡️ Interest: EUR 100;
➡️ Renovations: 100 EUR; To rent through SRO, FO sole trader/”non sole trader”, in commercial property or not?

SRO:
✅ Income tax (per year): 126 EUR;
✅ Dividend tax (annual) (“optional”): EUR 50;
✅ Minimum health insurance premium (monthly): EUR 0 or EUR 32 (new 2023) or EUR 85;
✅ Minimum social security contributions (monthly): EUR 0 (optional);
✅ Income tax and possibly VAT (which is a problem) apply on sales; FO sole trader (flat expenses):
✅ Income tax (per year): EUR 925 or EUR 514;
✅ Health insurance premiums (monthly): EUR 96;
✅ Social insurance premiums (monthly): EUR 0 or EUR 228;
✅ No income tax or VAT may apply on sale (as applicable); FO sole trader (real expenses and flats in OM):
✅ Income tax (per year): EUR 0;
✅ Health insurance premiums (monthly): EUR 85;
✅ Social insurance premiums (monthly): EUR 0 or EUR 201;
✅ Income tax and possibly VAT (which is a problem) apply on sale;

FO “non-entrepreneur” (flats in OM):
✅ Income tax (per year): €157 (because €500 is exempt);
✅ Health insurance premiums (monthly): EUR 0 or EUR 85;
✅ Social security contributions (monthly): EUR 0;
✅ Income tax applies on the sale but no VAT is due; FO “non-entrepreneur” (flats are not in OM):
✅ Income tax (per year): EUR 4,373;
✅ Health insurance premium (monthly): EUR 0 or EUR 85;
✅ Social insurance premiums (monthly): EUR 0;
✅ Neither income tax nor VAT may apply on sale; The ideal set-up is obviously always individual. In addition, other circumstances (for example) enter into it: ➡️ Deduction of VAT on the purchase of apartments (in some situations this is possible);
➡️ Use of tax bonuses (especially for children) and tax-free parts of the tax base, which can bring thousands of EUR per year for this FO in some options;
➡️ Not every rental can also be a business (the rental must meet the character of a continuous activity);
➡️ The property is in BSM;
➡️ Other income of the FO that affects the total amount of tax and levy liability;
➡️ Need to maximize social insurance benefits (e.g. maternity benefits);
➡️ Plans with the real estate (period of ownership, renovations,…); Who would be interested, tomorrow I will give a lecture of about 5 hours for Verlag C.H.BECK oHG on the topic of real estate and taxes.

The time space is large, so I will also cover big transactional topics such as: ➡️ Share deal/business sale/real estate sale;
➡️ In-kind contributions of real estate to companies;
➡️ Development projects – is it better to sell or contribute real estate to a company from a legal, tax and accounting perspective;
➡️ Breaking down the concept of “going concern”;
➡️ When is (can be) the sale of real estate exempt from VAT (different types of land, remodeling, utilities, development projects,…);