With approximately 215,000 active listings on Airbnb, and hundreds of thousands more on sites including Booking.com and HomeToGo, the short-term rental market has grown hugely in Germany over the last decade.
The advantages for “ad-hoc” landlords are clear. First and foremost, letting your home while you’re away brings in an income (possibly enough to pay for a good chunk of your holiday).
Secondly, for people who travel a lot – whether for work or pleasure – knowing that someone is at home can offer an additional sense of security.
READ ALSO: The rules in different parts of Germany about renting out your home on Airbnb
Remember: the tax authorities are watching
Whether you plan to let your whole home or just a single room, make sure you’re aware of the rules around declaring the income for tax purposes.
According to the Federal Association of Income Tax Assistance Associations (BVL), accusations of tax evasion can escalate quickly when people exceed the permissible income from renting living space but fail to make this clear in their tax returns.
Indeed, tax authorities sometimes target platforms specifically in order to track down taxpayers, according to reporting by the Deutsche Presse-Agentur (dpa).
Platform operators like Airbnb are also obliged to report users who make at least 30 rental transactions per year or earn more than €2,000.
Depending on where you live in Germany, fines for failing to declare taxable income from renting living space can be as high as €500,000.
What do I have to know?
If you earn less than €520 a year from renting living space on an irregular basis, you do not need to include this information in your tax return – although you should always keep a record of the transactions, just in case.
If your rental income is more than €520 a year, it must be included in your income tax returns and you will be taxed on the full amount.
If you don’t intend to make renting your property a habit, you may be able to classify the income as a “hobby”. Under this classification, if you end up bringing in an income it doesn’t have to be taxed, but nor can you claim any expenses or losses.
Income from rental property is also subject to VAT, but only if it exceeds €17,500 and you expect to earn more than €50,000 in a year.
Permanent rentals
Bear in mind: the €520 figure falls to €410 (after expenses) if you rent out living space on a permanent rather than an ad-hoc basis.
In other words, when a landlord rents out living space on a permanent basis, and their rental income exceeds their expenses by more than €410, the tax authorities will assume an “intention to generate income” (Einkünfteerzielungsabsicht) and tax the income accordingly.
“Expenses” generally refers to utility bills and maintenance costs, but can also include interest costs, insurance, property taxes, and depreciation.
How to calculate your costs on partial rentals
If you only rent out individual rooms and otherwise use the apartment yourself, the total costs for the apartment are divided according to floor space. If the rented room accounts for 25 percent of the living space, for example, then 25 percent becomes the rate for calculating deductible expenses.
If tenants and guests share a bathroom, this can also be taken into account – but the size of the bathroom must be divided by the number of people who use it.
What else should I know?
All rental hosts in Germany are required to collect and retain information about guests who stay at their property for three months or less. Hosts can either purchase reporting certificates online or create certificates themselves to meet this requirement. If you retain the guest data yourself, you will be required to comply with data protection laws, including the European General Data Protection Regulation (GDPR).
Depending on where you live in Germany, the local authorities may have additional requirements.
In Berlin, for example, anyone interested in renting out their home (or part of their home) for a short-term period needs a permit, whereas in Munich hosts are allowed to rent their primary homes to guests for a combined total of eight weeks per calendar year without a permit.
Note that these laws are constantly changing, so be sure to check your state’s website for up-to-date information on short term rental regulations.
Can I rent out my flat if I don’t own it?
Tenants interested in subletting their room or apartment are required to get written permission from their landlord before they can rent their space on platforms like Airbnb. Tenants who fail to do so might find themselves in breach of contract and therefore facing the threat of eviction.
In conclusion
Letting your home while you’re on holiday – or a spare room in your home – remains an attractive option for many – a flexible way to earn a little extra money and keep your home secure.
Just make sure that people know what you’re doing! If you fail to tell your landlord, your local authority (if necessary), or the Finanzamt, then a straightforward way to make life a little easier could rapidly descend into a nightmare.
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