Are payments into a maintenance reserve considered income-related expenses for tax purposes?

If maintenance reserves (formerly known as maintenance reserves) are saved in a condominium, they are only deducted as income-related expenses for a rented condominium when the maintenance reserve is spent on maintenance measures. In this respect, the owner of the individual condominium can use the administrator’s statement to determine the extent to which the maintenance reserve has been used for maintenance measures.

However, this principle is now being called into question. The background to this is that following the amendment to the German Condominium Act by the Condominium Modernization Act of 16 October 2020, the condominium owners’ association has acquired legal capacity. This could indicate that income-related expenses already exist when payments are made to the maintenance reserve. A test case on this issue is now pending before the Federal Fiscal Court under case number IX R 19/24.

PepperPapers tip for you:

The decision of the Federal Fiscal Court remains to be seen. In the case of materially significant payments into the maintenance reserve, you should check whether you should already claim the deduction for income-related expenses for tax purposes in the year of payment into the maintenance reserve with regard to this test case.