Reduced-rent letting to persons in need of assistance is subject to certain conditions in order to qualify as charitable.
What is changing
The catalogue of charitable purposes will be expanded to include the promotion of charitable housing purposes.
This refers to the reduced-rent provision of housing to persons who
- are reliant on the assistance of others, in particular due to their physical, mental or psychological condition, or
- receive social welfare benefits.
Going forward, their income must not exceed five times the standard social welfare rate; for single persons or single parents, the threshold is six times the standard rate.
Need of assistance must exist at the commencement of the respective tenancy.
The rent must be permanently set below the customary market rent.
Whether the rent is below the customary market rent only needs to be reviewed at the commencement of the tenancy and upon rent increases. It is also sufficient if the respective dwelling is let at a price that merely covers the actual expenses, including standard depreciation, and contains no profit mark-up.
Any resulting losses may be offset against other income from the non-commercial (ideelle) sphere.
Entry into force
Applies from 1 January 2025.
Frequently asked questions
Frequently asked questions
What is the promotion of charitable housing purposes?
The promotion of charitable housing purposes has been added as a new charitable purpose to the official catalogue. It covers the provision of housing at reduced rates to persons in need, in particular those who require assistance due to their physical, mental, or emotional condition or who receive social welfare benefits. As a result, such rentals can be recognised as charitable for tax purposes.
What income limits apply to tenants under charitable residential letting?
Tenants' income may not exceed five times the standard social assistance rate. For single individuals or single parents, the upper limit is six times the standard rate. The need for support must exist at the start of the respective tenancy.
How must rent be calculated for charitable (wohngemeinnützige) residential letting?
The rent must be permanently below the standard market rent. This is reviewed only at the start of the tenancy and upon rent increases. Alternatively, it is sufficient if the rent merely covers the actual expenses, including regular depreciation (AfA), without any profit margin.
How are losses from reduced-rate letting to persons in need treated?
Any losses arising from charitable residential letting may be offset against other income from the non-profit (ideeller Bereich) activities. This allows charitable landlords to operate on a sustainable tax basis even when rents do not fully cover costs.
When does the new regulation on charitable housing rental take effect?
The inclusion of charitable housing purposes in the catalogue of tax-privileged charitable purposes applies from 1 January 2025. From this date, qualifying reduced-rate rentals can be recognised as charitable.