§ 35a EStG: What the WEG statement must show

Most expenses you claim in your tax return lower your income. What you actually save then depends on your tax rate. Section 35a of the German Income Tax Act (§ 35a EStG) works differently, and that is what makes it so valuable: the amount comes straight off your tax liability. Here, one euro of relief is one euro less tax.

What is deductible, and how much

Owner-occupiers can claim 20 percent of the labor costs, in two separate categories:

• Household-related services such as caretaking, garden maintenance or stairwell cleaning: up to 4,000 euros of relief per year.
• Tradesmen's services, meaning repairs, maintenance and refurbishment: up to 1,200 euros of relief per year.

Two restrictions are decisive. First, only labor, travel and machine costs count. Materials do not qualify. If the stairwell is repainted, the painter's wages are eligible, the paint is not. Second, cash payment is excluded. There must be an invoice and a bank transfer, otherwise the tax office will not accept anything. That is not a formality but the core of the rule, which is aimed at undeclared work.

For WEG owners, everything hinges on the certificate

Anyone who lives in their own house has the tradesman's invoice in their own files. In a condominium owners' association (WEG) it works differently: the caretaker, the gardener and the painter are commissioned by the association, the invoice goes to the association, and all you see of it is your share in the monthly service charge (Hausgeld).

To claim the deduction anyway, you need a certificate from the property management company showing the share of the eligible labor costs attributable to you, broken down into household-related services and tradesmen's services. Without this statement, the deduction is practically impossible to obtain. You cannot estimate the amounts yourself, because you do not know how the association's invoices split between labor and materials.

A standard annual statement does not reveal this. It shows what the garden maintenance cost in total, not which part of that was labor. The property manager has to break down the invoices for this purpose. That is real work, which is exactly why not every firm does it unprompted.

Ask about it before you appoint a manager

This certificate is one of the most tangible services a property management company provides. It is not a service to philosophize about, it is hard cash on your tax assessment, and it comes up again every single year. So ask directly in the selection interview:

• Do you issue the certificate under § 35a EStG without being asked?
• Does it come with the annual statement or only on request?
• Are the labor costs shown separately for both categories?

Anyone who is evasive here will have you chasing the paperwork every year. What a property manager does beyond this, and what it costs, is covered in our guide property management costs. How the monthly service charge that these costs come out of is put together is explained in our guide Hausgeld.

This article provides a general overview and is no substitute for tax advice. For your specific situation, please consult a tax advisor.