(2025)
Consider reduced rental rates and furnishing surcharge
When renting to relatives, advertising costs can be fully deducted if the agreed rent is at least 66% of the local market rent (§ 21 para. 2 EStG). If only between 50% and 66% is charged, a positive surplus forecast is required. The basis for the local rent is usually the local rent index.
If a flat is rented furnished or partly furnished, a furnishing surcharge must be applied – but only if this can be derived from the rent index or customary market surcharges. A flat-rate deduction from depreciation (AfA) or a percentage return surcharge is not permitted (BFH, judgement of 06.02.2018, IX R 14/17).
Example: Furnishing surcharge reduces remuneration rate
A couple rents a furnished flat to their son at a reduced rate. The tax office increases the comparative rent by a furnishing surcharge (for fitted kitchen, washing machine, dryer) and thus arrives at a remuneration rate of less than 66%. The result: advertising costs are proportionately reduced. The BFH confirmed that surcharges are permissible – but only with verifiable market practice.
BFH: Only verifiable furnishing surcharges permitted
- Rent index surcharges (e.g. for fitted kitchen) are permissible.
- If such information is missing from the rent index, local market prices must be used.
- If no surcharge can be determined, the rent without furnishing applies.
- AfA or return surcharges are not a permissible basis.
Tip: Specify furnishing surcharge separately in the rental contract – together with basic rent and surcharges. Only if at least 66% of the local rent is reached are all advertising costs deductible.
Comparative rent: Rent index or comparable rental in the building?
If the rent of a comparable, rented-out flat in the same building deviates from the rent index, the question arises as to which rent is the benchmark.
The BFH (judgement of 22.02.2021, IX R 7/20) decided: The rent index should be used as a priority. If this is not suitable or not available, the local rent can also be determined via an expert opinion, a rent database or at least three comparable flats.
Large and luxurious properties: Total surplus forecast required
For living areas over 250 sqm or particularly elaborate furnishings, a total surplus forecast is required even if the rent is over 66% (BFH, judgement of 20.06.2023, IX R 17/21).
Example: A couple rents three villas (each > 250 sqm) to their children and claims high losses. The BFH does not recognise these losses – the rental is classified as a hobby, as there was no intention to generate a surplus.
In earlier judgements (e.g. of 30.09.1997, IX R 80/94), the BFH had already emphasised: For exceptionally large or luxurious properties, a 30-year forecast is regularly necessary.
Important: The 66% rule only concerns the objective remuneration (§ 21 para. 2 sentence 2 EStG). The subjective intention to generate income can be examined separately despite compliance with this limit.
