You buy a flat in Germany to let out and intend to renovate it afterwards. The financing already includes an expected tax refund for the invoices. Before you count on this for sure, it must be clarified how the work is to be classified for tax purposes. A craftsman’s invoice does not automatically mean an immediate deduction in the year of payment.
Defining the legal question correctly
§ 6 Absatz 1 Nummer 1a EStG covers, under its conditions, repair and modernisation measures within three years after acquisition: if the expenses excluding VAT exceed 15 percent of the acquisition costs of the building, they are treated as acquisition-related production costs (anschaffungsnahe Herstellungskosten). Sentence 2 names exceptions, including annually customary maintenance work; extensions are to be classified separately. [ESTG6] For income-related expenses (Werbungskosten) § 9 Absatz 5 refers accordingly to this provision. [ESTG9]
This short basic rule is not a complete tax audit. In particular, an amount below the threshold does not prove that every job would be immediately deductible. The classification of individual measures and the correct acquisition date belong in the professional assessment.
Do not take the reference figure from the listing
Collect the purchase contract, a technically substantiated apportionment of the acquisition, incidental acquisition costs, transfer dates and all works with the period of performance. For each invoice the service description and VAT should be identifiable. The relevant building value must not be taken uncritically as the total advertised purchase price including land.
Our purely hypothetical comparison already assumes professionally determined building acquisition costs of 180.000 euros. Fifteen percent of that is 27.000 euros. If, in the example, there are only expenses to be included without VAT amounting to 29.000 euros, they exceed this calculation figure by 2.000 euros. This arithmetic does not decide whether all your actual invoices belong to it.
Do not view each invoice in isolation
Keep a continuous overview for the relevant period. An initially smaller measure and a later further job must not be kept separate for the purposes of the assessment merely because they have different invoice numbers. You should have it examined concretely which transactions are to be recorded together.
Submit unresolved additional requests to the tax advisor before your financing plan proceeds on the basis of the previous unchanged classification. The article does not recommend artificially shifting work or invoices. Necessary technical measures require professional planning regardless of tax considerations.
Be able to carry the liquidity without an unconfirmed refund
Prepare a payment schedule without the previously hoped-for immediate tax effect. Add a professionally confirmed tax treatment separately with its actual timing. This will make it clear whether the renovation was only financeable under an unsecured assumption. The correct tax assessment may change your decision; it does not replace the prior payment to the company nor an individually sustainable financing solution.