Tax bonus: Not for new buildings

Tradesmen's invoices belong in the tax return. Almost everything the tradesman creates or renovates in the taxpayer's home is eligible for tax deductions. New construction is excluded!

This article is part of the special topic Tax bonus for tradesmen's invoices: What you should know

In principle, craftsman services performed in the taxpayer's household are tax-deductible under Section 35a Paragraph 3 of the Income Tax Act (EStG). It does not matter whether the work is related to production or maintenance costs, i.e., whether something is being manufactured or renovated (Federal Fiscal Court, Ref. No.: VI R 61/10). However, this only applies if the work is performed within the "premises" of an "existing household." Work on new buildings is therefore excluded, as the Central Association of German Skilled Crafts in Berlin points out based on a recent ruling. 

After moving in, it remains a new building

According to Section 35a of the Income Tax Act (EStG), the standard income tax rate can be reduced upon application by 20 percent of the expenses (up to a maximum of €1.200) if you use tradesmen's services for renovation, maintenance, and modernization measures in your house or apartment. Only the labor hours are deductible, not the materials. More on this topic:The Berlin-Brandenburg Finance Court had to decide whether the work was carried out in a new building or not (case no. 6 K 6199/16). the application of exterior plaster, the erection of a fence and the laying of turf.

All work was carried out after the property owners had moved into their new building. However, the tax court held that a new construction project is not completed when the developer begins use, i.e., moves in.

The judges therefore hold that a new construction project is not terminated or completed simply by the developer moving into a shell or partially completed building and only subsequently carrying out individual construction work. In each individual case, it must be examined whether the respective project is still closely related in time and substance to the new construction of the building. However, according to the ZDH, this was the case in this case.

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The judgment is not final. An appeal is pending before the Federal Fiscal Court under case number VI R 53/17.  

Source: ZDH Tax Department