How to declare construction object?

Taxes
1

Dear Forum,

Last year I’ve signed a contract and started building an apartment. Okay, not building directly, but rather waiting for developer to finish it :slight_smile:

Since it is tax time of year I’d like to understand how to reflect my state in tax declaration. To finance the property I got a loan. However I got only the first tranche from a bank, more will come this year.

To simplify there’re some made up numbers. Let’s say that the whole construction costs 1M:

  • paid 200K from own money
  • got 300K from the bank
    • paid 4K as interest rate last year
  • the rest 500K is to be taken
    • this money are not touched, so zero interest

If I got this right I can deduct interest rates (4K from above). But how to deal with wealth taxes? What should be declared as wealth? Today I own only fraction of the land where the building is suppose to be.

2

I’m in a slightly different position (because I’m building directly), but my understanding is:

  • the money you paid still belongs to you until the apartment is handed over: as such you need to declare it in your wealth
  • the money you got from the bank is also part of your wealth
  • but the debt immediately cancels it 1:1, still my understanding is that you need to declare both sides
  • you can deduct the interests of the mortgage you paid that year
  • there’s no input rental income yet (until the apartment is handed over to you)
  • you pay wealth tax on the value of the land you own

The 500k not taken is just a credit line, it has not tax implications to the best of my knowledge until exercised.

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3

Thanks for the input!

  • you pay wealth tax on the value of the land you own

Oh another good question is how to get this value? I assume there’ should be something like cadastral value.

4

Unfortunately, I don’t know the answer.
I had very similar questions in a recent thread: Tax implications of RE purchase - #3 by Ilixio

I believe the tax office will communicate it you, and I believe it will simply be the purchase price. But I don’t have details. Best contact the tax office I guess.

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