Costs for demolition and new construction of a contaminated house

The expenses for the renovation of a house contaminated with harmful substances can be deductible as an extraordinary expense, but this only applies in the case of demolition and new construction if this was unavoidable.

The costs for the removal of harmful pollutants in a building can constitute a tax-deductible extraordinary expense. If the indoor air is contaminated with formaldehyde vapors, case law automatically assumes that the remedial measures are inevitable if the limit value of 0.1 ppm is exceeded. However, the Baden-Württemberg tax court has restricted this principle to the extent that the measures taken must also be absolutely necessary in order to eliminate the formaldehyde emissions.

Only then are the expenses also unavoidable, which is a prerequisite for an extraordinary burden. The tax court therefore did not consider the complete demolition and new construction of a building to be unavoidable, as the measured pollutant concentration in the case in question was only just above the limit value and could therefore possibly have been significantly reduced by sealing, waterproofing, recoating or ventilation measures. The claimant was unable to prove that a complete new build alone would lead to an improvement in the health complaints and was therefore unable to claim the demolition and new build costs as an extraordinary burden.