Landlords are regularly members of a so-called community of owners. Alternatively, they rent an entire house, but should or must also make provisions for future repair and repair work. This so-called maintenance reserve is treated differently from “usual” repair costs, since there is no outflow for tax purposes at the time of its formation.

Principle 1: What is a maintenance reserve?

Properties of all types and sizes are subject to a certain wear and tear, which is caused primarily by the dwelling, but also by external factors such as the weather. Due to this "consumption" of the object again and again costs for maintenance, repair and maintenance work.

In order to be able to bear these expenses reliably, the legislator recommends the formation of a so-called maintenance reserve. Shareholders usually fill this “pot” together and divided according to the shares of the respective owners in the total living and usable area of the property. Landlords who alone hold several residential units or a single object can also form a reserve for maintenance – for example on the daily money account.

If repair and maintenance work is pending, the corresponding amounts are taken from the maintenance reserve. Subsequently, the reserve is “reconstructed” up to a predetermined amount, for example EUR 100,000. A common reserve of the apartment owners is the property of the community (§ 31 WEG) and does not belong to the special ownership of the individual apartment. However, if this is sold, the new owner joins the joint-ownership and thus also benefits from the maintenance reserve already built up.

2. Tax treatment of the reserve: contribution of funds by the owner

Before the maintenance reserve exists in the desired or desired amount, the owners of the apartment must build it together. This is done regularly by annual additions, with each owner having to pay his share according to his quota special property.

Example: A property has a total of 500 m2 of living space. The owner Max owns a condominium of 85 m2. Its share of the traffic areas of the object is 20 m2. In 2024, a total of EUR 20,000 is to be built up as a maintenance reserve. Max must contribute to the build-up of the reserve in accordance with his share of 105 m2/500 m2 (21 %).

However, the deposits are not deductible for tax purposes, as there is no outflow within the meaning of § 11 (2) sentence 1 EStG. The reason for this is that the reserve remains the property of the owner and this asset is now merely kept elsewhere. This view is in line with the BFH’s established case law (inter alia, resolution of 08.10.2012, IX B 131/12).

Use and use of the maintenance reserve: What applies here?

It also follows from the constant case-law of the Bundesfinanzhof that the maintenance reserve only has a tax effect if used accordingly by the landlord. There is a tax-relevant outflow within the meaning of § 11 (2) EStG, which leads to advertising costs according to § 9 (1) EStG.

The respective tax impact occurs in the amount in which funds are taken from the maintenance reserve and attributed to the individual owner. For example, if the community covers a cost of EUR 100,000, an owner such as Max, who owns 21% of the total property, can claim EUR 21,000 for tax purposes.

It should be noted, however, that the actual qualification of the expenses incurred is always decided in individual cases. For example, the 15 % limit of § 6 (1) no. 1a EStG can also be exceeded by joint renovation costs of the joint owners. The same applies to subsequent production costs according to § 255 paragraph 2 HGB if significant improvements in the overall condition occur.