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Remodelling a bathroom does not generate (pro-rata) expenses for a home office

A taxpayer may generally deduct expenses of up to € 1,250 per year for his/her home office if no other workspace for his/her business or professional activities is available to him/her. If the home office constitutes the focus of the taxpayer’s entire business or professional activities then there is no limit to the expenses that can be deducted. In this regard, the Federal Fiscal Court (Bundesfinanzhof, BFH), in its ruling from 14.5.2019 (case reference: VIII R 16/15), decided that renovation and remodelling costs for rooms that are exclusively, or more than only to a minor extent, privately used do not constitute deductible expenses for a home office. The case in question involved an extensive renovation of a bathroom and a corridor at a taxpayer’s residential house where there was also a home office. The taxpayer sought a pro-rata deduction of the renovation and remodelling costs incurred in proportion to the percentage of the floor space of the home office. The ruling of the BFH judges upheld the appeal of the fiscal authority. General building operating costs, such as, for instance, charges for chimney sweeping and electricity or the costs of insurance and the renovation of parts of the building may be deducted on a prorata basis because these concern the whole building. By contrast, the renovation costs for rooms that are almost exclusively privately used may not be taken into account as business expenses on the basis of the percentage of the floor space of the home office but, instead, have to be attributed to exclusive or almost exclusive private usage.

Please note: Renovation and remodelling costs can in any case be deducted as business expenses for a home office if they relate directly to the office.

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