GRP Rainer LLP

Brokerage Costs as Income-Related Expenses

Brokerage costs which are incurred from the sale of a house may be included as work-related expenses for rental income under certain circumstances.


Cologne, NRW -- (SBWIRE) -- 07/18/2013 -- GRP Rainer Attorneys Tax Accountants in Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London explain: The Fiscal Court in Münster in its judgment from 22 May 2013 (file no.: 10 K 3103/10 E) decided that brokerage costs which are paid by the owners as part of a sale of a house may be included in the amount of work-related expenses that are written-off against rental income which the taxpayer achieves from leasing other properties.

In the present case described here, three properties belonged to the plaintiff in the suite and they were all rented out. As the plaintiff wanted to make one of the properties available for sale, the plaintiff consequently commissioned the assistance of a real estate agent. The mortgage financing of properties of the plaintiff were apparently secured by the property to be divested. It was probably provided for in the contract that the purchase price was primarily intended to pay off the loan used in the financing of the properties. For that reason, an agreement should be included in the contract such that the purchase price will be directly transferred to the Bank which granted the loan. Accordingly, the plaintiff assumed brokerage costs that were incurred in this respect for the repayment of the loan may be reported as work-related expenses to write-off against rental income. Tax authorities rejected that such costs be written-off against rental income.

Now, the Fiscal Court in Münster has decided that these brokerage costs may be deductible under certain circumstances. The Fiscal Court in Münster maintained that it is quite possible that costs to sell may be present concurrent to borrowing costs.

Tax law is multifaceted and complex; therefore, for individuals with no developed expertise in this area it can be very challenging to maintain an overview of possible complexities and opportunities. The present case also makes this clear. A tax attorney can help uncover tax irregularities.

About GRP Rainer LLP
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.

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