There are considerable real estate assets in numerous families, the value of which has increased significantly in recent years. If these properties are rented out, tax saving potentials may remain unused – because the annual depreciation is still made by the old, low tax base. With the refinancing carousel, owners generate new depreciation volume without having to give the property out of the family.
1st case: Private real estate financing without tax impact
Private individuals who purchase a property for their own residential purposes have comparatively little (tax) design leeway here. Because they can – with the exception of monuments and comparable objects – not claim depreciation. Also debt interest, which accrues for a possible loan, are tax irrelevant costs of private living according to § 12 no. 1 EStG.
With the so-called refinancing carousel, these adverse effects can be avoided. Applied correctly, private individuals benefit not only from the deductibility of debt interest, but also from a depreciation basis equal to the current market value.
The prerequisite for the refinancing carousel is real estate assets that are already in the family group – ideally for more than 10 years. These buildings must be rented, i.e. used to generate income from renting and leasing (§ 21 EStG). A lease intention is already sufficient, so that no active tenancy or lease relationship has to exist.
In summary, the following conditions should therefore be met for an optimal design of the refinancing carousel:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.