No input tax deduction from building demolition costs in the event of unclear future use of the property
by Elena Weismann in News from tax law
Even when a property has been rented and is umsatzsteuerpﬂichtig (subject to Value Added Tax), demolition and disposal costs are no longer part of the rental which is subject to VAT.The sales tax that is invoiced in connection to building demolition and disposal costs are therefore only deductible as input tax if at the time of the demolition it is clear that on the basis of objective suggestions, the property will also be used for sales tax purposes in the future. The entrepreneur must clarify their intentions. This can be achieved e.g. through advertisements citing that the property is umsatzsteuerpﬂichtig (subject to Value Added Tax) leasing, sales offers that include value added tax, or via concretized brokers orders.