How to claim tax relief on your parking space

Anyone who rents a second home to live closer to their place of work may be able to claim some of the costs against tax. Accommodation costs are taken into account on a monthly basis, up to a maximum of €1,000. But do the costs of renting a parking space count towards this? The Federal Fiscal Court (BFH) has ruled on this in case IV R 4/23.

In the case in question, the claimant had rented a flat, including an underground parking space, in order to live closer to his place of work during the week. The monthly rent, plus service charges, already exceeded the maximum amount of €1,000. The claimant paid a further €170 per month for the parking space. He declared these costs in his income tax return as additional expenses incurred in connection with maintaining two households, alongside his general accommodation costs. The tax office did not take the parking space costs into account. In its view, these costs form part of the general accommodation costs and cannot be claimed separately. Following unsuccessful appeal proceedings, the claimant brought an action before the Lower Saxony Finance Court.

The Finance Court, and ultimately the Federal Finance Court, ruled in favour of the claimant. Only those costs attributable to the use of the flat, such as rent, service charges and the second-home tax, should be included under accommodation costs. However, the costs of renting a parking space are not related to the use of the accommodation, but to the parking of a car. 

According to the courts, the rental of a parking space was necessary due to the tight local parking situation. The claim in the tax return, in addition to accommodation costs, should therefore be allowed. The claimant was thus able to claim an additional €2,040 as income-related expenses. At a tax rate of 42 per cent, this results in an additional tax saving of more than €850 per year.

Even though, as in the present case, there is a separate tenancy agreement for the parking space, the Federal Fiscal Court emphasises that this is irrelevant for tax assessment purposes. Even where there is a single contract, the costs must be treated separately. In both cases, however, it should be noted that the costs must be necessary and customary. Unreasonably high parking costs are therefore unlikely to be taken into account in full.

In addition to accommodation and parking costs, taxpayers who maintain two households may also claim one return journey to their family home per week. This is calculated at a flat rate of 38 cents per kilometre travelled. Even the costs of initially furnishing the second home may be partially taken into account, provided they are necessary and reasonable in amount.

Anyone who has previously included the cost of renting a parking space under accommodation costs in their tax return as part of a dual-home arrangement should declare this separately in future. If the tax return has already been submitted and the tax assessment notice has been issued, the change can still be requested within the one-month appeal period. Taxpayers should therefore carefully check whether the tax office has correctly taken the parking space costs into account.