You want to gift part of a rented property while continuing to service the original acquisition loan yourself. For your planning, the ongoing payment and its tax allocation must be examined separately. The bank continuing to receive the same amount does not automatically mean that your previous full interest deduction remains unchanged.
Recognise precisely this transfer case
In its judgment of 03.12.2024, IX R 3/24, the BFH dealt with a gratuitous co-ownership transfer where acquisition liabilities were fully retained. The interest attributable to the transferred share was not recognised by the previous owner as special income-related expenses (Sonderwerbungskosten). The court explains the severed connection to the owner’s own income generation insofar as financing of the gift. [ANTEIL]
This article does not uncritically apply the result to every succession arrangement. A joinder to the debt, an assumption of the debt, reserved rights or other differing circumstances require their own assessment. Business cases are also not treated in the same way as the private rental case considered here.
Set up a separate payment view
In the entirely fictitious example, annual interest of 10.000 euros is incurred. The previous sole owner retains the loan but gratuitously transfers 40 percent of the rental property. As an expressly simplified model allocation, to be professionally confirmed, 6.000 euros of interest would then belong to the retained share and 4.000 euros to the transferred share.
The outflow to the bank initially remains 10.000 euros. If, in the model, only the first-mentioned amount is taken into account for tax purposes, the private cash plan still must not show merely a 6.000 euro payout. Likewise, the difference of 4.000 euros is not automatically an additional tax payment to be made. It initially concerns the assumed deduction basis.
Give two instructions to the adviser
The first task is: Which interest is to be classified, according to the exact planned contract, for which person and which share? For this the adviser needs the loan origin, the complete transfer draft and the actual rental and payment status.
The second task concerns personal affordability thereafter. Which income remains, which payments continue and which professionally determined tax effect arises? The new income allocation is not carried forward from the earlier sole-owner calculation. Internal voluntary payments by other persons receive the status actually clarified.
Calculate before committing to the new status
The result is not a recommendation to necessarily send debts with the transfer or to retain them. Both decisions have further legal and financial consequences. The work is complete when the remaining bank burden and the changed tax classification are together in the succession plan. An unchanged transfer alone is not proof of an unchanged subsequent tax burden.