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Save taxes with real estate

Save taxes with real estate

  • Introduction
  • Saving taxes when buying real estate
    • 2.1 Deductible Costs when Buying Real Estate
    • 2.2 Own Home vs. Capital Investment
  • Minimize Real Estate Transfer Tax
    • 3.1. separation of land and building
    • 3.2 Country-specific differences
  • Saving taxes as a landlord
    • 4.1. deductible costs when renting out
    • 4.2. advertising costs
  • Saving taxes as owner-occupier
    • 5.1. homeowner's pension law ("Wohn-Riester")
    • 5.2 Tax advantages for renovations
  • Saving taxes when selling real estate
    • 6.1. speculation period
    • 6.2 Commercial Real Estate Trading
  • Monument real estate and its tax advantages
  • Tax Advisor: Your Key to Optimizing Savings
  • Conclusion

1. introduction

Taxes are an inevitable part of our lives, but that doesn't mean you have to pay more than is necessary. This comprehensive blog post will show you how to save on taxes through smart real estate investments to more effectively manage your assets and secure your financial future.

2. save taxes when buying real estate

Buying real estate offers a variety of ways to reduce taxes. In doing so, you can deduct costs associated with the purchase and financing of your property for tax purposes. This allows you to reduce your taxable income and thus pay less tax.

2.1 Deductible costs when buying real estate

When you purchase real estate, you can claim a variety of costs for tax purposes. These include the purchase costs of the land, modernization costs of the building, acquisition costs of the property, broker commissions, interest and appraisals. These costs reduce your taxable income and significantly reduce your tax burden.

2.2 Own home vs. capital investment

It is important to note that the tax benefits of buying a property depend on your use or intention. If you use the property as an investment, the tax options are often more comprehensive than if you use it for your own purposes. Therefore, you should carefully consider your plans and objectives to obtain the best tax benefits.

3. minimize real estate transfer tax

The real estate transfer tax is one of the first financial hurdles when buying a property. Depending on the state, it can range from 3% to 6.5% of the purchase price. We will show you how to minimize this tax to reduce the overall cost of your real estate purchase.

3.1 Separation of land and building

A proven method to reduce the real estate transfer tax is to purchase the land and the building separately. This allows you to pay the real estate transfer tax only on the value of the land, which can mean significant savings. This strategy is particularly interesting for investors who are not tied to the location.

3.2 Country-specific differences

The amount of the real estate transfer tax varies by state. We explain the state-specific differences and give tips on how to find the best strategy to minimize the real estate transfer tax in your state.

4. save taxes as a landlord

Renting out real estate offers numerous opportunities for tax optimization. As a landlord, you can deduct a variety of costs to reduce your taxable income. This allows you to significantly reduce your tax burden while building your wealth.

4.1 Deductible costs when renting out

Tax-deductible costs when renting are varied and include, among other things, advertising costs, renovation work, repairs, property taxes, property management costs, costs for tax advisors and lawyers, and operating costs such as waste disposal and heating. By claiming these costs, you significantly increase your tax savings.

4.2 Income-related expenses

Advertising costs play an important role in reducing your tax burden as a landlord. These are costs that are directly related to renting out your property. These can be, for example, maintenance work, renovations and insurance premiums. The amount of deductible expenses depends on various factors, but they offer an effective way to minimize your tax burden.

5. save taxes as owner-occupier

Even if you use the property yourself, there are tax benefits you can take advantage of. We shed light on the law on owner-occupied pensions ("Wohn-Riester") and show how renovations can be claimed against tax to reduce your tax burden.

5.1 Home Ownership Pension Act ("Wohn-Riester")

The Eigenheimrentengesetz allows you to receive a monthly subsidy from the government and to claim up to 2,100€ as special expenses in your tax return. However, it is important to note that the capital saved must be taxed at retirement age.

5.2 Tax advantages for renovations

If you carry out renovation work on your property, you can deduct part of the costs for tax purposes. However, it is important to distinguish between labor and material costs, as only the pure labor costs can be claimed at 20%, up to a maximum of €1,200 per year. In addition, household-related services such as cleaning services, gardening, care services and driving services can also be included in your tax return. Note, however, that only 20% of the pure labor costs can be taken into account and the total costs per year may not exceed a maximum amount of 4,000€. The possibilities to save taxes as an owner-occupant through the real estate are limited, but often overlooked and should be used in any case.

6. save taxes when selling real estate

Taxes can also be saved when selling a property. As with other private sales, the profit would have to be taxed. However, there is one exception that can save you a lot of taxes: the speculation period. There are two options for the speculation period for real estate:

6.1 Speculation period

If the property has been rented out in the last 10 years, the profit from the sale does not have to be taxed. If you want to invest wisely, you should rent out the house or land for at least 10 years so that you do not have to pay taxes on the sale of the property.

6.2 Commercial real estate trade

Especially high earners want to invest their money profitably and often rely on real estate. If you are in the fortunate position of owning several properties, be careful when selling the property. The tax office classifies people who have sold three properties within five years as commercial real estate dealers. As a result, the income must also be taxed afterwards.

7. monument real estates and their tax advantages

Monument real estate is a subcategory of real estate, but it is very interesting especially for investors. Basically, the same rules apply to listed properties as to "normal" properties. As an investor, 100% of the acquisition costs of the listed property can be deducted. This possibility does not apply to owner-occupied properties.

Since the federal government cannot preserve all monuments itself and yet wants them to be preserved, there are attractive tax benefits for listed properties. Thus the reorganization costs of the real estate can be set off with following letting to 100% over 12 years from the tax. Even as an owner-occupant, you can claim 90% of the costs for the renovation against tax over 10 years. If you would like to calculate your personal tax savings by investing in a listed property, it is best to use my tax calculator!

In addition to the tax advantages, listed properties are an attractive investment opportunity, as in many cases they are in a very good location and thus the risk of loss of rent is lower and you can assume a constant increase in value. For more detailed information on how to save taxes with listed properties, click here!

8. tax consultant: your key to optimize savings

A tax advisor can help you maximize the best tax benefits and ensure you don't make mistakes. We explain how working with a tax accountant can optimize your savings.

9. conclusion

In summary, real estate is a smart way to save on taxes, whether you're a landlord or an owner-occupant. Use this knowledge to optimize your finances and invest wisely in real estate. Save taxes and build wealth - it's a win-win situation.

We hope this blog post has given you valuable insight into the world of real estate investing and tax savings. If you have further questions, don't hesitate to consult a tax advisor. Happy investing!