Deductions Permitted  for Sold Real Estate

When you have sold real estate and have signed the contract in front of the public notary then this is a clear scenario for your tax office. You have given up you interest in achieving income. The consequence of this loss is that you cannot deduct any expenses anymore. Well, no rule without an exception as the decision of FG Hessen (re 3 K 1524/04) shows.

In the case of the judgment, a landlord had terminated the contract with a tenant because the latter owed back rent for several months. So the landlord sued his tenant for eviction and after successful eviction, he sold the empty apartment. After an audit, the Finanzamt denied the deduction of costs from renting. However, the Fiscal Court of Hesse judged to the advantage of the landlord and allowed the deduction. The judges argued that it suffices, that the landlord at least tries to collect the open rental payments to show that he wants to earn income.

Hint:

To be on the safe side for an audit, i.e. to be able to prove your interest in earning income, save receipts for classified ads for the open apartment or other comparable costs.