If the owner sells a rental property and undertakes to renovate and pay rent in the purchase agreement, there are no income-related expenses for income from letting and leasing.
Practical example:
The taxpayers generated income from letting and leasing several properties. The taxpayers sold one rental property in 2020. In the notarized purchase agreement, it was agreed that the sellers would pay the buyer Rent until a new tenant moves in. They also undertook to keep the apartment clear out and to renovate. The tax office did not recognize these costs or the rental payments as income-related expenses for income from letting and leasing.
In these proceedings, the tax court had to decide on the suspension of enforcement. It rejected the suspension of enforcement because the expenses from the purchase agreement obligation did not serve to generate income from letting and leasing. Rather, the Cost and rent default risk transferred in full to the sellers until the property is relet.
These are factual for a Purchase price reduction, so that, as a result, the purchase price was reduced. It is obvious that the sale would not have come about, or at least not at the agreed purchase price, without the assumption of these obligations by the taxpayers. Although the need for renovation and vacancy was initially caused by a previous tenant, the connection of the expenses with the Disposal process.
There is no connection with the previous rental income, so that a subsequent deduction of income-related expenses is excluded.
The focus is on sales: The required connection with income from letting and leasing is not given if the expenses are caused solely or predominantly by the sale of a rental property. If repairs undertaken by the seller as part of the sale of a property are carried out, the connection between the repair expenses and the previous rental income is established by the link to the sale of the property. superimposed.
No deduction of income-related expenses for non-taxable sales: The fact that the expenses were partly caused by the previous rental activity, which consists of the fact that the rental property became in need of repair during its use by the seller, is sufficient in the case of a non-taxable sale is not sufficient to justify the deduction of income-related expenses from rental and leasing income in accordance with Section 21 EStG.
However, if it is a taxable speculative transaction in accordance with Section 23 (1) sentence 1 no. 1 EStG, income-related expenses may be incurred.