Tax advisor explains: Household-related services

If your household uses the services of tradespeople, care providers, or other household-related service providers, you may be eligible for tax breaks as the person paying for these services. This tax incentive is only available if the expenses cannot already be deducted as business expenses, income-related expenses, special expenses, or extraordinary burdens. In this article, you’ll learn whether—and for which household-related services—you can benefit when filing your income tax return. As your tax advisor in Düsseldorf

and Oberhausen

, our team has summarized the most important points.

What are household-related services?

As mentioned earlier, household-related services qualify for tax incentives. First, we need to clarify what is meant by household-related services. Household-related services are activities that could theoretically be performed by members of a private household, but instead a service agency or a self-employed service provider is hired for this purpose.

It is important that the activities are performed within your “household.” A household can be either a home you own or a rental apartment. The household also includes ancillary rooms (basement, attic) and outdoor areas (garden). The household is defined by the property boundaries. Your household may be located in Germany, another EU country, or within the European Economic Area.

Examples of household-related services:

• Household chores (e.g., cleaning, window washing, ironing)
• Gardening (e.g., mowing the lawn, trimming hedges)
• Caretaker services and building cleaning (stairwell)
• Laundry and garment care in the taxpayer’s household
• Care and feeding of a pet
• Use of the emergency call system within an apartment as part of “assisted living”
• Moving services for private individuals

Examples of non-eligible activities:

• School meals for children or tutoring
• Personal services such as haircuts or foot and nail care
• Garbage collection fees and property management fees
• Issuance of an energy performance certificate
• TÜV inspection fees for the elevator
• Architectural services
• Costs for damage assessment (e.g., burst pipe)
• All work outside the property
• Veterinary costs
• Walking dogs outside the apartment
• Costs for "Meals on Wheels" delivery
• Payments to an emergency call center for alarm monitoring
• Real estate agent fees when purchasing a home for personal use
• Construction of a public combined sewer line

In addition to the “basic rules” mentioned above, there are various special cases in which a tax benefit may or may not be available. We cannot address all the specifics here and advise every taxpayer to consult a qualified tax advisor to avoid mistakes. In some cases, many taxpayers are not even aware that a particular service is tax-deductible. During a detailed consultation with our tax advisors in Düsseldorf or Oberhausen, we will work with you to identify the best ways to reduce your tax burden.

Which tradespeople’s services qualify for tax benefits?

Tradespeople’s services can also be included among the household-related services mentioned above. If you have repairs, maintenance, and renovation work performed in your household by tradespeople, you may be eligible for an additional tax deduction. Tax benefits apply to activities aimed at restoring the current condition to a defect-free state (e.g., having a tradesperson check the functionality of a system), as well as to tradesman services such as repairing existing damage or taking preventive measures to avoid damage.

Examples of deductible tradespeople’s services:

• Work on interior and exterior walls
• Work on the roof, facade, garages, etc.
• Repair or replacement of windows and doors
• Painting/varnishing doors, windows, wall cabinets, radiators, and pipes
• Repair or replacement of flooring (e.g., carpet, hardwood, tile)
• Repair, maintenance, or replacement of heating systems, electrical, gas, and plumbing installations
• Modernization or replacement of the built-in kitchen
• Renovation of the bathroom
• Fire and water damage restoration (provided no insurance coverage has been provided)
• Erection of scaffolding
• Gutter cleaning
• Thermal insulation measures
• Drying out of masonry
• Inspection of a system’s functionality
• Repair and maintenance of household appliances (e.g., washing machine, dishwasher, stove, computer)
• Landscaping
• Paving work on the residential property

Please note that skilled trade services performed as part of a new construction project are not eligible for tax benefits. Additionally, the services of an appraiser are not deductible. Accordingly, for example, measurement or inspection work cannot be claimed.

Special provisions for nursing and care services

Expenses for household-related nursing and care services may also be claimed for tax purposes. Neither a determination nor proof of the need for care is required for this tax benefit. Simply using services for basic care (personal hygiene, nutrition, and mobility) or support is sufficient to qualify for the tax benefit. The tax reduction is household-based. Accordingly, even if two people in need of care live in the same household, they can only claim the tax reduction once in total.

Who is eligible, and what documentation must be provided?

You can only claim any of the tax reductions listed above if certain conditions are met. Only those who meet the following three requirements are eligible:

1. You must be the client commissioning the household-related service or the work of a tradesperson.
2. You must have received an invoice issued in your name.
3. Payment for the service must have been made to the service provider’s or tradesperson’s bank account. Cash payments are not accepted!

If a service is commissioned by a homeowners’ association, you as an individual homeowner can only receive a tax reduction if the following conditions are met in the annual statement:

1. Payments for household-related services and tradespeople’s work must be listed separately
2. The proportion of tax-deductible costs must be specified
3. The share attributable to the respective homeowner must be calculated individually

A tenant may also claim the tax deduction if the utility bill includes amounts for tax-deductible services commissioned by the landlord. For this, it is important that the landlord generally lists and documents the tenant’s share in the utility bill separately and broken down by service.

It is advisable to keep the invoice and all bank transfer receipts. In some cases, these documents must be submitted to the tax office.

What does the tax reduction look like in detail?

Now that you know which services are eligible for tax relief, we would like to discuss the tax reduction in more detail. It is important to note that, in principle, only labor costs are eligible for tax relief. Labor costs include expenses for the use of the respective service, including travel costs and VAT. Accordingly, material costs or other goods delivered in connection with the service, with the exception of consumables (e.g., cleaning supplies), are not eligible. It is essential that the proportion of these labor costs can be determined based on the invoice.

If the expenses are classified as business expenses or income-related expenses, or are treated as such, a tax reduction is excluded!
Below, we have summarized the most important reduction amounts in a clear table:

The tax reduction amounts listed above are simply deducted from the calculated income tax liability. Of course, it is important to note that you must be required to pay income tax to qualify for this deduction. If you do not pay any income tax in a given year, you cannot claim this deduction!

Any questions about household-related services?

As mentioned at the beginning, there are various special situations that may qualify as household-related services but were not covered in this article. Therefore, it is advisable to consult a qualified tax advisor to ensure you do not overlook potential tax savings. So if you have general questions on this topic or would like to have your options reviewed, we—as tax advisors in Düsseldorf and Oberhausen—are the perfect point of contact. Our team of qualified professionals will be happy to help you solve problems and provide you with detailed advice. Just contact us to schedule a consultation. We look forward to your visit!