Due to the time freed up after their main occupation and often for financial reasons, pensioners are increasingly taking up self-employed or commercial work after the end of their main career (e.g. as writers, craftsmen, service providers, etc.). To carry out the profession and for administrative reasons, the home office often serves as the central element of the business. The corresponding tax question is frequently whether the costs for the home office can be deducted (in full).
No Consideration of Retirement Benefits
To assess whether the home office may be deducted, § 4 Abs. 5 Satz 1 Nr. 6b Satz 2 EStG requires that the home office constitutes the centre of all business and professional activity. In principle, only income that requires the taxpayer to actively work in the relevant assessment year is taken into account. For this reason, retirement benefits under § 19 Abs. 2 Satz 2 Nr. 1 Buchst. a EStG are not considered when assessing whether the home office represents the centre of all business and professional activity (BFH ruling of 11 November 2014 – VIII R 3/12, BStBl II 2015 p. 382). Ultimately, only the spatial factors must therefore be examined (e.g. separated room, virtually no other private use). The BFH ruling regarding retirement benefits is, according to the literature, also applied to pension income (Schütze, HFR 2015 p. 851).
Lump Sum for Recognition of the Home Office
Instead of deducting the full costs for the home office, taxpayers may also claim a lump sum of EUR 1,260 per year without supporting documents (§ 4 Abs. 5 Satz 1 Nr. 6b Satz 3 EStG). If the self-employed or commercial activity is taken up during the year, the lump sum must be reduced for each full month in which the conditions for the home office were not met (§ 4 Abs. 5 Satz 1 Nr. 6b Satz 4 EStG). However, a deduction of the full costs without claiming the lump sum is likewise only possible once the conditions for the home office are satisfied. In terms of the period considered, the lump sum is therefore treated the same as the full cost deduction. Furthermore, the annual lump sum is to be applied on a person-related basis. This means that if the taxpayer carries out several self-employed or commercial activities in the home office, the lump sum may only be deducted once. The same applies to the full cost deduction for the home office. Here too, the taxpayer may only claim the costs for the home office once. However, in the case of several self-employed or commercial activities of one taxpayer, the full cost deduction or alternatively the lump sum must be allocated according to the extent of use of the respective activity in the home office.
Use of the Home Office by Several Taxpayers
If several persons (e.g. spouses or life partners) use a home office jointly, the conditions for recognition of the home office must be examined individually for each taxpayer. If the examination shows that a home office exists for both, the expenses may be claimed by the person who economically bears them. If the expenses related to the home office are paid via a joint account, these expenses may be claimed by the respective debtor (an allocation may be necessary). For example, if the electricity bill is in the wife's name, she may claim these costs in her income tax return.
Note: Home Office as Necessary Business Assets
A home office used for self-employed or commercial purposes is generally to be capitalised as necessary business assets. At least where the value thresholds of § 8 EStDV are exceeded.
Frequently asked questions
Frequently asked questions
Do pension payments or annuities count when determining the center of activity for a home office?
No. When examining whether the home office constitutes the center of all business and professional activity (§ 4 Abs. 5 Satz 1 Nr. 6b Satz 2 EStG), pension payments under § 19 Abs. 2 Satz 2 Nr. 1 Buchst. a EStG are disregarded (BFH ruling of 11.11.2014 – VIII R 3/12). Legal commentary extends this principle to annuity income as well. Only income requiring active engagement during the assessment year is relevant.
How much is the annual home office flat rate and when is it reduced?
Instead of deducting actual costs, an annual flat rate of EUR 1,260 can be claimed without receipts (§ 4 Abs. 5 Satz 1 Nr. 6b Satz 3 EStG). If the activity begins or ends mid-year, the flat rate must be reduced by one-twelfth for each full month in which the home office requirements were not met. Both the flat rate and the full cost deduction require that the home office is the center of the professional activity.
Can a pensioner deduct home office costs multiple times when pursuing several self-employed activities?
No. The annual flat rate of EUR 1,260 or the full deduction of actual costs is person-related and can only be claimed once in total. If several self-employed or commercial activities are carried out in the same home office, the costs or the flat rate must be allocated to the respective activities according to their share of use.
How is a home office shared by spouses treated for tax purposes?
The requirements for a home office must be examined separately for each user. If both meet them, each spouse may deduct the expenses they have economically borne. For payments from a joint account, the respective debtor can claim the costs – for example, if the electricity bill is in the wife's name, she may deduct those expenses.
Is a home office considered business assets in the case of self-employed activity?
When used for self-employed or commercial purposes, a home office generally must be capitalized as required business assets, provided the value thresholds of § 8 EStDV are exceeded. This has consequences for the later disclosure of hidden reserves, particularly upon cessation of the activity or sale of the property.