SteuerGo FAQs

(2022) Can a home office be deducted for rental activities?

The management of property or substantial capital assets is not considered an "occupational or business activity", but the regulations of § 4 para. 5 no. 6b EStG regarding the home office apply accordingly (§ 9 para. 5 EStG). This means that to determine the centre of activity, the focus is not on "the entire business and professional activity" but on "the entire income-generating activity" of the taxpayer (BFH ruling of 27.3.2009, BStBl. 2009 II p. 850).

Therefore, if you have a main job and also carry out administrative work in your home office, you have "no other workplace" for this. If you do not have a job but use the home office exclusively to manage your assets, it could potentially be the "centre" of your activity.

A home office is only recognised by the tax authorities if it is actually "necessary" for generating income. The authorities rely on an older BFH ruling of 27.9.1996 (BStBl. 1997 II p. 68). Therefore, the assets must be of a certain size for the exclusive use of the home office for administrative work to be credible. HOWEVER: The Federal Fiscal Court has recently changed its view. The "necessity" of the home office is no longer relevant. The "necessity" is not a criterion for deduction. Therefore, a home office can be deductible if the room is used almost exclusively for professional purposes. The amount of time spent on office work is irrelevant (BFH ruling of 3.4.2019, VI R 46/17).

Therefore, a home office used for managing property can be deductible as income-related expenses for rental income if the room is used almost exclusively for administrative work. However, if a home office is not used almost exclusively for income-generating purposes, the costs of the home office cannot be deducted as income-related expenses, even partially.

The BFH rejects a cost split and a partial deduction of income-related expenses (BFH ruling of 16.2.2016, IX R 23/12).

The case: A pensioner with a retirement pension and capital income manages 2 rental properties with 9 flats and 5 garages, which are rented to people other than the tenants, in a home office. Here, the home office is not the "centre", so only the limited deduction of income-related expenses up to 1,250 Euro is possible (provided the room is used only for rental purposes). However, as the room was also used 40 per cent for private purposes, the Federal Fiscal Court did not recognise the home office costs as income-related expenses, not even 60 per cent.