Hello,
Actually, we have been looking for an existing property since last summer. According to our mortgage broker, we have a budget of around 300,000 (all-in), which a bank is likely to approve.
The market here in Schleswig-Holstein has also become very tight, and the houses on offer are often in need of renovation, so you easily exceed the budget (especially since many city dwellers laugh at our house prices and like to secure a holiday home here).
Now the question is whether it would be possible to build a house within our budget (assuming we can get a building plot). Our requirements are not very high; it doesn’t need to be a huge house. 120 square meters (1300 square feet) would be completely sufficient.
In a neighboring village, plots are currently being developed. The price isn’t fixed yet but is expected to be below 100 euros per square meter. The plots are about 700 square meters (7500 square feet) in size. Unfortunately, we have no experience with this topic at all, and I definitely don’t want to miscalculate.
We can only contribute limited personal labor. We are not unskilled, but both fully employed with a child, dog, and horse. What are your thoughts?
Actually, we have been looking for an existing property since last summer. According to our mortgage broker, we have a budget of around 300,000 (all-in), which a bank is likely to approve.
The market here in Schleswig-Holstein has also become very tight, and the houses on offer are often in need of renovation, so you easily exceed the budget (especially since many city dwellers laugh at our house prices and like to secure a holiday home here).
Now the question is whether it would be possible to build a house within our budget (assuming we can get a building plot). Our requirements are not very high; it doesn’t need to be a huge house. 120 square meters (1300 square feet) would be completely sufficient.
In a neighboring village, plots are currently being developed. The price isn’t fixed yet but is expected to be below 100 euros per square meter. The plots are about 700 square meters (7500 square feet) in size. Unfortunately, we have no experience with this topic at all, and I definitely don’t want to miscalculate.
We can only contribute limited personal labor. We are not unskilled, but both fully employed with a child, dog, and horse. What are your thoughts?
Olli-Ka schrieb:
Hello,
unfortunately, yes. But there are quite a few options.
Something is being invested in the house near Hannover – deductible due to rental purposes.
Moving expenses are deductible because of my wife’s job-related relocation; why she was relocated doesn’t matter – hopefully.
Health insurance can be paid up to three years (36 months) in advance – if interested, there is good information at "Der Privatier (dot) com."
And let’s see what else the tax advisor comes up with.
Regards, Olli I still don’t fully understand the “tax trick.” I can pay my private health insurance premiums in one lump sum for the next 36 months (3 years) and then claim the entire expense in the tax return for the payment year. So far, so good. But where is the advantage in that? I get the tax refund for the next three years all at once, and then I have nothing to deduct in the following two years.
Can you explain it to me? 😀
Since income tax is not calculated on a linear basis, when preparing the tax return, there is an effort to smooth out income over the years.
If, for example, a severance payment in one year causes a significant increase in the tax rate, it is possible to try to avoid those peaks with high tax burdens by shifting all expenses into that year.
A taxable income of €35,000 (approximately $37,500) in the first year, €50,000 (approximately $53,500) in the second year, and €35,000 (approximately $37,500) in the third year results in a higher tax burden than an even distribution of €40,000 (approximately $42,800) per year across all three years.
As a business owner, this is relatively easy by bringing forward purchases or expenses, estimating provisions more generously, or deferring revenues to the next year, etc.
As an employee, this is considerably more difficult. However, as you can see, there are still a few minor adjustments possible here as well.
If, for example, a severance payment in one year causes a significant increase in the tax rate, it is possible to try to avoid those peaks with high tax burdens by shifting all expenses into that year.
A taxable income of €35,000 (approximately $37,500) in the first year, €50,000 (approximately $53,500) in the second year, and €35,000 (approximately $37,500) in the third year results in a higher tax burden than an even distribution of €40,000 (approximately $42,800) per year across all three years.
As a business owner, this is relatively easy by bringing forward purchases or expenses, estimating provisions more generously, or deferring revenues to the next year, etc.
As an employee, this is considerably more difficult. However, as you can see, there are still a few minor adjustments possible here as well.
DaSch17 schrieb:
I still don’t fully understand the “tax trick.” I can pay my private health insurance premiums all at once for the next 36 months (3 years) and then claim the expense in a lump sum on my tax return for the year of payment. That much I get. But where’s the benefit? I get a tax refund for the next three years all at once but then have nothing to deduct in the following two years.
Can you explain that to me? 😀Hello, my plan now is that I will (almost) have no income over the next few years, so very little tax liability...
It makes sense to generate as many expenses as possible this year because, due to a severance payment, I have moved up into a higher tax bracket; last month I even had to pay over €5000 (euros) solidarity surcharge, even though it was supposed to have been abolished.
I only have rental income, but only half of it counts to me, the other half goes to my wife.
I will receive unemployment benefits for two years, then live off the severance for another two years, and then retire at 63.
So everything fits. 😀
Regards, Olli
Musketier schrieb:
A taxable income of €35,000 (about $38,000) in year 1, €50,000 (about $54,000) in year 2, and €35,000 (about $38,000) in year 3 results in a higher tax burden than an even distribution of €40,000 (about $43,000) each year. However, this effect should not be overestimated.
With tax class 1 and no other factors, the gross-to-net calculator available online shows that the even distribution scenario saves a clean total of €200 (about $215) over all three years, at least in this example.
These optimizations become truly interesting if in one year there is almost no income at all; then the impact of personal allowances and tax brackets can differ significantly.
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