The Germans like to borrow: From the smartphone on your own property to start-up everything is conveniently financed in installments. The enormous range of different forms of loan raises the question of the extent to which it is possible to sell a loan. Under certain conditions, the legislature allows to claim credit costs from the tax office. This applies above all to job-related investments, but also to expenses for the training and acquisition of real estate. But under what circumstances is it permissible to sell the loan? The Lending Guide gives tax tips.
Which costs can be deducted in which amount?
Repayment and interest
Amortization does not constitute an income and is not taxed on lending. Therefore, the repayment can not be claimed as an expense . When it comes to being able to withdraw a loan, interest as a cost of money acquisition is only accepted under certain conditions by the Treasury. This is the case, for example, when the loan is used to earn permanent income . This means that a loan can be withdrawn if it serves to increase operating expenses or advertising costs.
Once a borrowed loan meets the criteria of an investment or working loan, it is possible to deduct the loan. The interest is taken into account in the tax return in order to reduce profits.
There are several situations that require credit for a business. Especially in the start-up phase runs almost nothing without a loan. So-called working capital or investment loans are taken out to cover running costs in a company. Not only the interest rates are variable, but also the term. Once a borrowed loan meets the criteria of an investment or working loan, it is possible to deduct the loan. The interest is taken into account in the tax return in order to reduce profits . If a start-up buys a laptop or a smartphone on credit, the interest can be claimed for tax purposes . For this purpose, the loan agreement is to be set up so that the clerk at the tax office knows why the money was taken up. It is advisable to have the repayment amounts and the interest shown separately .
Many workers use their cars for their commute. Others want to avoid crowded trains and are considering taking out a car loan. The credit for a car can not be sold here. Because for employees, the tax office evaluates the work path as private . The situation is different for freelancers and self-employed people who work in the field. In this case, it is possible to claim the credit for tax purposes. In addition, the tax authorities allow the partial taxation of motor vehicle costs.
Many occupations require local flexibility from the employee. This may involve pursuing an activity far away from the actual center of life. If the distance is so great that it is no longer reasonable to drive home, most of them set up a second home. Furnishings and renovation of this domicile cost money. An employee may claim tax on this loan . It has to be considered that a secondary residence tax is due.
Loans for real estate and modernization
Who rents his property or uses his own company, can deduct the loan, or the loan interest. However, the loan must be explicitly taken out for the financing or modernization of this property . These interest flows into the operating costs or advertising costs and increase them accordingly. Here again a difference between the two cost points is to be considered. Business expenses are expenses that are caused by a business. Incentive expenses are expenses that an entrepreneur uses to secure, maintain and develop his or her acquisition. The loan can only be taken into account for tax purposes if, for example, new windows have to be installed in this property. This increases the value, which guarantees long-term rental income. The situation is somewhat different if the taxpayer lives in his own property and only leases parts of it. In this case, the loan can only be deducted pro rata . This also applies to a study located in a condominium. Interest that must be paid to finance, modernize or purchase the property will be credited according to use . If a study in a 100 square meter house has an area of 20 square meters, 20 percent of the credit costs can be claimed for tax purposes.
If an office equipment purchased, there is no reduction, because desk and office chair have the value that was paid for them. Over time, wear of these assets, which is associated with an impairment. This asset reduction can be tax deducted and deducted as business expenses or expenses . Depreciation takes into account the useful lives of the respective acquisition , irrespective of whether it was paid in full or with a loan. Every year, a portion of the purchase price can be claimed for tax purposes. If a purchase for the office has a useful life of five years, the costs can be deducted pro rata over these five years from the tax. If the investment is for two or seven years, this timeframe applies. If the total purchase price was less than 800 euros, the total amount can be stated once completely in the tax return. In order to find out which useful life a particular asset has, there are so-called depreciation tables. Afa stands for “deduction for wear” . These tables are not legally binding, but give a guide and are recognized by official bodies. The Federal Ministry of Finance provides the current depreciation tables