(2023)
Which accommodation expenses can I deduct?
As part of maintaining a second household, you can deduct the costs for overnight stays in your second home. Only proven costs are recognised, not flat rates. Any accommodation where you have the possibility to stay overnight is considered a second home. How often you use this possibility is irrelevant. Accommodations can include:
- a rented flat,
- your own house, or
- a hotel room.
If you use a rented flat at the second place of residence, you can claim the rent and ancillary rental costs such as heating or electricity for the second home. Expenses for necessary furnishings can also be deducted. These include, for example, a table, bed, wardrobe, or kitchen and bathroom furnishings. For purchase costs up to 800 Euro net, the amount can be deducted in full immediately; more expensive items must be depreciated over a longer period. For new furniture, the service life is 13 years. If you use a hotel as an overnight accommodation, you can deduct the actual proven overnight costs. If the overnight price includes catering costs and these are not shown separately, the deductible amount is reduced by the following items:
- by 20 percent for breakfast and
- by 40 percent for lunch or dinner of the meal allowance for 24-hour absence (28 Euro).
If you live in an owner-occupied flat, you can deduct your expenses (ancillary costs of the flat, interest on a mortgage loan, depreciation, etc.) up to the amount that a reasonable rented flat would cost.
For a second household in Germany, the deductible amount is 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 operating costs, 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 on a monthly basis 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 as part 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 a second household in accordance with § 9 (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 is to limit only the costs for the accommodation to 1.000 Euro per month, but not other necessary expenses.
- The maximum deductible amount of 1.000 Euro per month includes, according to the explanatory memorandum to the law, "all expenses incurred for the accommodation or flat, e.g. rent including operating costs, 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".
If the second home is owned by the employee, the actual expenses, e.g. depreciation, interest on loans, operating costs, repair costs, can be deducted as income-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).
When using a furnished or partly furnished flat, a higher rent is generally payable. If the rental contract does not include 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 on an estimated basis 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).
The Saarland Fiscal Court has ruled that the costs for a rented parking space or garage are also not part of the accommodation costs and therefore do not fall under the 1.000 Euro limit. They can therefore be deducted even 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).
The tax authorities have recently announced a welcome simplification: If the acquisition costs for the furnishing and equipment of the second home - excluding work equipment - do not exceed a total of 5.000 Euro including VAT, it can be assumed for simplification purposes that these costs are considered "necessary" or not excessive and are recognised as income-related expenses without further examination (BMF letter of 25.11.2020, BStBl 2020 I p. 1228, para. 108).
The Munich Fiscal Court has recently ruled against the tax authorities that expenses for the second home tax are not part of the accommodation costs that can be recognised as income-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 a second household (FG Munich of 26.11.2021, 8 K 2143/21).
For 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 (1) no. 5 EStG). The question is whether costs for energy, i.e. for electricity, heating and hot water, are also included in the 1.000 Euro limit. The question is not entirely clear. However, the Mecklenburg-Vorpommern Fiscal 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, sewerage, 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 Fiscal Court, the costs for heating and hot water in a second household are deductible without limit (unfortunately, the court does not explicitly comment on electricity costs, except for the costs for house lighting). However, it is questionable whether the tax authorities and the BFH share the view of the Mecklenburg-Vorpommern Fiscal Court.
