Claiming depreciation and repair expenses (rental income) – Verohallinto can i apply for housing benefit

If you pay annual repair costs (current expense), they are deductible against your rental income for the year when you pay them. However, if a major or capital repair job was done (capital expense), you may only get a deduction in the form of depreciation every year, or alternatively, you may get a deduction when you sell the dwelling. Price is deductible in the form of depreciation

If you are renting out a house or a building, its value will diminish through tax-deductible depreciation every year, and you get a tax benefit. The permissible rate of depreciation is 4% of the residual (i.E. Yet undepreciated) acquisition cost of a house or building used as a dwelling, residence or office. Similarly, the permissible rate is 7% if the rented-out building is used as a retail space, store, shop, factory, workshop etc.How can i apply for housing benefit

if the buildings are rented to tenants only for some months during the year, depreciation must be computed accordingly. If you sell the building, you are not allowed to deduct any depreciation in the final year.

If you as the landlord have bought any moveable property or furniture for a rented-out dwelling, you can deduct 25% per year as annual depreciation, provided that the furniture etc. Has an economic life of more than three years or its purchase price is higher than €1,000.

The tax administration does not perform depreciation calculations in order to deduct them automatically. To claim depreciation, report it electronically (on the veroilmoitus verkossa; skattedeklaration på nätet e-service) or complete the paper-printed form 7H (for flats or apartments) or form 7K (houses and other real estate).

If you own a building and the land where it is located, you cannot get deductions for any depreciation of the land.How can i apply for housing benefit similarly, if you own shares in a housing company or real-estate company, you cannot get deductions for depreciation. Annual repair expenses

When annual repair work is done on an apartment or building, it is for restoring its original condition. The generally accepted level of technical requirements is taken into consideration. Expenses of annual repair are deductible from your rental income the year when you pay them.

More extensive work, including extensions, renovations and similar changes, is viewed as major repair, often referred to as major improvement, capital expense or capital improvement. The difference from annual repair lies in the fact that the apartment or house now reaches a higher standard or acquires some added space. In other words, the result is an improvement from its earlier standard.

Typical repair jobs in any residential property contain elements of both annual and major repair. Division of the total expenses is necessary in order to work out the permissible tax deductions in correct proportions.How can i apply for housing benefit in these circumstances, they must be split between annual and major repair according to the quality and extent of the repairs. Non-deductible repair expenses of a rented-out apartment

You cannot claim expenses against rental income if you had repairs made immediately after you bought the apartment, before you made it available for tenants to obtain it. In cases like this, we add the repair costs to the apartment’s acquisition price instead. They are taken into consideration later when you sell the apartment, because they have an impact on the taxable capital gain or the tax-deductible capital loss. Whether the repair falls into the category of annual repair or major, capital repair is not significant.

If you do the repair work yourself, you cannot include any compensation for your own working hours in your deduction claim.How can i apply for housing benefit however, you may claim the expenses of buying the materials, wages to workmen, and travelling from your home to the location of the rental property. Straight-line depreciation of major repair expenses in rented apartments

If you as the landlord have major repair and improvement commissioned and you pay for it yourself, you can deduct this expense over a ten-year period. The depreciation must be calculated under the straight-line principle, meaning that each year, you can deduct a tenth of the entire expense. If you sell the apartment or if its rental contracts are terminated before the entire improvement has been depreciated off, the undepreciated portion will be added to the acquisition price of the apartment. This affects your taxable capital gain.