Nobody enjoys paying bills, and that includes their utility bills. Each year they show up, often with unpleasant surprises such as an elevated heat bill leaving you wondering if you really heated your home so much more than in the previous year.
Utility bills – also known as “second rent” – are just as “popular” as tax returns (Steuererklärung). Although they are considered a pain, combine the two and you may be pleasantly surprised: you can actually save money from them! Your utility bill contains deductible costs for tenants and landlords alike, the magic words being household-related expenses (haushaltsnahe Aufwendungen).
Which utility costs (Nebenkosten) can I include on my tax return?
According to § 35a of the Income Tax Act (EStG), work completed by tradespeople around your home and garden is supported by tax – regardless of whether you or your landlord commission the work. Household-related expenses are divided into three separate sections: household-related employment, household-related services, and tradespeople costs.
Some deductible costs from your utility bill in the household-related services (haushaltsnahe Dienstleistungen) section include:
- Hallway & supply room cleaning
- Garden maintenance
- Snow removal services and street cleaning on the property
- Janitorial services
- Window cleaning
- Pest control
Deductible tradespeople services (Handwerkerleistungen) include:
- Chimney cleaning
- Work on roofs, facades, floors, garages, interior and exterior walls
- Vandalism removal (e.g. graffiti)
- Asbestos removal
- Pipes/gutters cleaning
- Repair and maintenance of heating, elevator, fire extinguisher, smoke detector, electrical, gas and water installations, and common machines (e.g. washer and dryer)
- Heating meter replacement
- Paving on the property
- Terrace roofing or parking spots for cars and bicycles
- Drying/renovation of masonry
Labor costs, travel costs, consumption expenses, and machinery expenses can all be offset against tax – material costs, on the other hand, cannot be deducted.
Tip: Landlords can deduct consumption meter readings (electricity, gas, water, heating) and statement preparations from their taxes as income-related expenses (Werbungskosten). Tenants cannot deduct these expenses.
Typically, tenants cannot deduct private rent and utility costs (i.e. electricity, water, heat, property tax), but if you have a work room in your home (häusliches Arbeitszimmer) that you use for your professional activities, a portion of these expenses can be deducted on your tax return as income-related expenses. This also applies for self-employed persons – but for them, income-related expenses are called business expenses (Betriebsausgeben) and are not to be confused with operating costs (Betriebskosten) on your utility bills.
If you have a second home for work-related reasons (doppelte Haushaltsführung), costs for the second home (rent and utilities) can be claimed on your tax return. A maximum of 1,000 euros per month can be claimed regardless of whether you are the tenant or owner of the home.
How much can I deduct in utility expenses?
Up to 20 percent of your household-related expenses can be claimed on your tax return, the maximum amount that can be deducted depends on the section of household-related expenses: Up to 4,000 euros per year can be deducted for household-related employment and services and up to 1,200 euros per year for tradesmen services. If your household-related employment is a minijob, up to 510 euros per year can be deducted.
You won’t reach these maximum amounts with your utility bill alone, but there are other additional expenses that you can claim on your tax return. Domestic help, pet care, and nursing services can also count towards your household-related expenses, unless you already deducted them as extraordinary expenses (außergewöhnliche Belastungen). You can also deduct 20% of the tradesmen’s costs for laying a new floor or repairing a washer.
Household-related expenses are deducted directly from your tax burden, so if your utility bill lists 300 in janitorial costs, you can reduce your taxes by 60 euros (20%) – but if the 300 euros consists of material and labor costs, you can only deduct the labor costs. Instead of entering household-related expenses directly on the main tax return form (Mantelbogen) you have to use the additional household-related expenses form – if you’d prefer to complete your tax return paperless and conveniently, you can simply answer the corresponding interview questions using our online tool.
Proving your costs to the tax office (Finanzamt)
Tax reductions for household-related services are intended to combat under-the-table work, which is why you need to provide the tax office with correctly issued invoices paid with either credit cards or bank transfers, not cash. The invoice must be broken down into labor costs, material cost, and travel costs.
Usually, your landlord’s utility bill is sufficient proof for the tax office – but if not, don’t worry. Simply ask your landlord to provide you with a separate statement of your utility costs to submit to your local tax office. Your landlord is required to agree to provide you with this according to a 2009 ruling by the Berlin-Charlottenburg District Court (case no. 222 C 90/09). The detailed statement is free of charge and shows your share of the deductible items (separated into labor and material costs).
What if my utility bill is late?
If you receive your utility bill after you already filed your tax return and received a tax assessment notice (Steuerbescheid), the tax office is required to still accept your delayed bill and change your tax assessment, even if it is already final. This was decided by the Cologne Tax Court on August 24, 2016 (case no. 11 K 1319/16). An informal letter requesting the change suffices – for the sake of simplicity, you can refer directly to the aforementioned court ruling in your request to change your tax assessment. If this is too time consuming for you, you can claim the expenses in your next tax return, so for the year in which you received the statement.
Operating costs (Betriebskosten) for landlords
The utility costs paid by tenants are monthly advance payments for the landlord’s utility bill and count towards the landlord’s taxable rental income. These expenses serve to acquire, secure, and maintain income (in this case, rental income) and can therefore be deducted as income-related expenses on Form V: Income from renting and leasing (Anlage V). If you wish to discover more about deductible costs for landlords, there is a detailed explanation in our article here.