(2023)
What can I deduct for second homes?
The tax office does not impose strict requirements on the employee's second home at the place of work. This can be a flat, a hotel room, or a furnished room. The frequency of use does not matter; the accommodation must simply be available. However, the second home must not become the new main residence, as this would end the tax benefits. If these conditions are met, various work-related expenses incurred due to maintaining a second household can be claimed for tax purposes.
This starts with the search for accommodation. Expenses incurred during the search, such as travel costs for viewing properties, telephone or postage fees, can be deducted as work-related expenses. The tax office also recognises moving costs. These include transport costs for a removal company or rental vehicle and travel expenses on the moving day.
In the first three months of maintaining a second household, meal allowances can even be claimed. The amount of the allowances depends on the duration of absence from the main residence. They are:
- 24 hours: 28 Euro
- 8 to 24 hours: 14 Euro
For travel expenses, the first journey there and the last journey back are fully recognised, to be proven, e.g. by ticket. Alternatively, if a car is used, the general mileage allowance of 30 cents per kilometre can be applied. Weekly trips home, on the other hand, are recognised with the distance allowance of 0.30 Euro per kilometre (or 0.38 Euro from the 21st km).
Accommodation costs or the costs of the second home can also be deducted as work-related expenses. Only proven costs, no flat rates, are recognised.
Since 2014, the deductible amount in Germany has been limited to a maximum of 1.000 Euro per month. This maximum amount includes all expenses for the accommodation or flat that are borne by the employee, in particular:
- Rent including service charges, also for a furnished flat,
- Purchase costs for necessary household and furnishing items,
- Second home tax,
- Renovation, etc.
The maximum amount of 1.000 Euro applies monthly and as an average value for the entire year. If the expenses are less than 1.000 Euro in some months and more than 1.000 Euro in other months, the excess amounts may be offset against the unused maximum amounts.
The Federal Fiscal Court has recently ruled against the tax authorities that the costs for the necessary furnishing of the second home in the context of a work-related second household do not count as accommodation costs, the deduction of which is limited to 1.000 Euro per month. Rather, expenses for furnishings and household items - insofar as they are necessary - are fully deductible as other necessary additional expenses due to maintaining a second household in accordance with § 9 para. 1 sentence 3 no. 5 EStG (BFH ruling of 4.4.2019, VI R 18/17).
- According to the BFH, expenses for furnishings and household items are not covered by the maximum amount, as these are incurred only for their use and not for the use of the accommodation. The use of the furnishings is not the same as the use of the accommodation itself. The legislative aim of the new regulation was to limit only the costs for the accommodation to 1.000 Euro per month, not other necessary expenses.
- The maximum deductible amount of 1.000 Euro per month includes, according to the legislative justification, "all expenses incurred for the accommodation or flat, e.g. rent including service charges, rental or lease fees for parking spaces, also in underground garages, expenses for special use (such as garden, etc.) borne by the employee". The amount of 1.000 Euro is based "on a flat of approximately 60 sqm, which has always been used by the courts as a reference, depending on location and equipment".
Tip: If the second home is owned by the employee, the actual expenses, e.g. depreciation, interest on loans, service charges, repair costs, can be deducted as work-related expenses up to the maximum amount of 1.000 Euro per month. Here too, the costs for necessary furnishings and household items can be deducted in addition to the maximum amount (BMF letter of 24.10.2014, BStBl. 2014 I p. 1412, para. 103).
Tip: When using a furnished or partly furnished flat, a higher rent is generally payable. If the rental contract does not specify a breakdown of the rent for the use of the flat and the use of the furniture - as is usually the case - the rent paid can be apportioned by estimation according to § 162 AO. The use of the flat is then deductible up to 1.000 Euro per month, and the use of the furniture is deductible beyond that (BFH ruling of 4.4.2019, VI R 18/17).
Tip: The Saarland tax court has recently ruled that the costs for a rented parking space or garage do not count as accommodation costs and are therefore not subject to the 1.000 Euro limit. They can therefore also be deducted if the rent for the flat is already so high that the limit is exceeded (court order of 20.5.2020, 2 K 1251/17).
Currently, the tax authorities have announced a welcome simplification rule: If the purchase costs for the furnishings and equipment of the second home - excluding work equipment - do not exceed 5.000 Euro including VAT in total, it is assumed for simplification purposes that these costs are considered "necessary" or not excessive and are recognised as work-related expenses without further examination (BMF letter of 25.11.2020, BStBl 2020 I p. 1228, para. 108).
Tip: The Munich tax court has recently ruled against the tax authorities that expenses for the second home tax do not count as accommodation costs, which can be recognised as work-related expenses up to a maximum of 1.000 Euro per month. Rather, the second home tax can be recognised additionally as "other expenses" in the context of maintaining a second household (FG Munich of 26.11.2021, 8 K 2143/21).
Tip: In the case of a second household in Germany, the actual expenses for the accommodation are only deductible up to the maximum amount of 1.000 Euro per month (§ 9 para. 1 no. 5 EStG). The question is whether costs for energy, i.e. for electricity, heating, and hot water, are also subject to the 1.000 Euro limit. The question is not entirely clear. However, the Mecklenburg-Vorpommern tax court has issued a legally binding ruling stating (judgment of 21.9.2022, 3 K 48/22): "It therefore appears appropriate and in line with the purpose of the law to include only those costs in the 'accommodation costs' that are usually included in the calculation of an average gross cold rent and are therefore also covered by the flat rate of 1.000 Euro, which is intended to replace the calculation of the average rent. These are the monthly amounts for water, sewage, street cleaning, refuse collection, house cleaning and lighting, chimney cleaning, caretaker, public charges, building insurance, and cable connection. Surcharges for central heating, hot water supply, subletting, and furniture are not included in the gross cold rent (Federal Statistical Office, http://www.destatis.de/Themen/Gesellschaft und Umwelt/Einkommen, Konsum und Lebensbedingungen/Bruttokaltmiete)." Conclusion: According to the Mecklenburg-Vorpommern tax court, the costs for heating and hot water in the case of a second household are deductible without limit (the tax court unfortunately does not explicitly comment on electricity costs, except for house lighting costs). However, it is questionable whether the tax authorities and the BFH share the view of the Mecklenburg-Vorpommern tax court.
