Severance payment to tenant can lead to production costs

The compensation of tenants after the purchase of a property in order to be able to carry out renovation work more quickly can lead to acquisition costs that are close to production.

Compensation paid to tenants for the premature vacating of apartments with the aim of carrying out renovation measures can lead to production expenses close to acquisition. For the Münster Fiscal Court, a direct causal connection to the construction measure is sufficient to justify the qualification as acquisition-related production costs. In the court's view, this interpretation is supported by the purpose of the provision, according to which the renovation of a property immediately after purchase is to be treated in the same way for tax purposes as the acquisition of a property that has already been renovated and is therefore more expensive. In the second case, tenant compensation borne by the seller for the purpose of renovation would have been reflected in a higher purchase price.