The tax deductibility of tradesman’s costs following storm damage is an issue that is of great importance to many homeowners, especially given that extreme weather events are becoming increasingly common.
Tax support: that’s what matters
The tax claim for tradesmen’s costs after storm damage is part of the German tax system, which aims to support homeowners who need repair work to be carried out on their privately used homes. This support comes in the form of a tax bonus, which is intended to alleviate the financial burden of the repair work, as WISO Steuer writes in an online article. It is important to emphasize that the tax bonus does not apply to all types of costs. For example, material costs cannot be claimed for tax purposes, while labor, travel and machine hour rates are taken into account, as it goes on to say. A separate tax bonus of up to 40,000 euros applies to energy-related renovations, including on materials, spread over three years (Section 35c EStG). A specialist company certificate is required for this, according to aberland-beratung.de.
A key aspect of tax deductibility is the way in which tradesmen’s services are paid for. The tax office only recognizes expenses that have been verifiably transferred, continues WISO Steuer. Cash payments are not accepted as this is intended to help curb undeclared work. For a successful tax claim, an invoice and proof of cashless payment, such as bank transfer or direct debit, are required. The receipts (paper or digital) should be kept for at least four years, as the tax offices can check longer periods and recognize digital evidence. But how high is the tax bonus?
The tax bonus covers 20 percent of the costs incurred, but is capped at 1,200 euros per year, according to WISO Tax. This upper limit applies to all tradesman services that occur in a household within a year and not per individual measure. This means that the maximum tax bonus for all craft work in one year is 1,200 euros, regardless of how many different jobs were carried out, as it concludes.
Borderline cases and exceptions
However, an important aspect concerns the situations in which insurance covers the costs of storm damage. In such cases, no tax bonus is possible because the taxpayer is not financially burdened in this case, CHIP said in an online article. The only exception is your own deductible, for which you can apply for the tax bonus. Different regulations apply to rented properties. If tradesman costs are incurred for such properties, landlords can declare these expenses as business expenses in their tax returns, as it goes on to say. This differs from the regulation for owner-occupied residential buildings. The right to a tax reduction also no longer applies if public funding is used for the repair, according to wohnfrage.de.
There are also cases in which the tax reduction also includes expert work, for example if a static calculation is required before renovation measures, as Finanztip emphasizes. However, only additional services directly related to the craftsman’s services (e.g. static calculations for a roof repair as part of the renovation) are deductible. Independent reports or consulting services are clearly excluded.
Editorial team finanzen.net