Understanding your service charge statement — and saving money with it

Once a year it arrives: the operating cost statement, known in Germany as the Betriebskostenabrechnung. To many tenants it looks like columns of numbers — yet there is much more in it: a complete overview of the services your home received over the year, and a tangible tax advantage that many tenants give away year after year.

This article explains in plain language what the statement contains, how advance payments and the annual result fit together, how you can save tax with the statement, and which costs you can influence yourself. It is general information, not legal or tax advice — for your personal situation, a tax adviser or an income tax assistance association (Lohnsteuerhilfeverein) can help.

What your statement contains: the typical items

An operating cost statement lists the building's running costs and allocates them to the individual flats. Most items almost explain themselves once you know what they stand for:

• Property tax: the tax the municipality levies on the plot.
• Water and wastewater: fresh water for the flats and drainage via the sewer system.
• Heating and hot water: fuel or district heating, the system's operating electricity and the annual consumption metering.
• Caretaker: the ongoing care of the building — inspection rounds, small jobs, a contact person on site.
• Stairwell cleaning: the regular cleaning of the common areas.
• Garden maintenance and winter service: lawns, hedges and leaves — and cleared, gritted paths in winter.
• Waste collection: disposal via the municipal bins.
• Insurance: building and liability insurance protecting the property.
• Lift: electricity, maintenance and the emergency call system, where a lift exists.
• Communal electricity: lighting for the stairwell, basement and outdoor areas.

Advance payments, statement, result: how it all fits together

Together with your rent, you pay a monthly advance towards the operating costs — an estimate, usually based on the previous year. Once a year, the accounts are settled: the building's actual costs are compiled, your share is calculated and offset against your advance payments.

The result is either a credit — you paid more in advance than was incurred — or a balance to pay. A balance does not mean something went wrong: in most cases it simply reflects higher energy prices or higher consumption, for instance after a cold winter. Heating and hot water are almost always the largest block of the statement — and that is exactly where prices and consumption have the strongest effect.

After a statement, the monthly advance payment is often adjusted so that the next annual result lands as close to zero as possible. That smooths your costs over the year and avoids surprises — in both directions.

The overlooked tax break: Section 35a EStG for tenants

Now for the most valuable part of the statement, which many people miss: your operating costs include services that the German tax office rewards. Under Section 35a of the German Income Tax Act (EStG), not only owners but also tenants can deduct household-related services and tradesmen's services directly from their income tax — via the shares contained in the operating cost statement.

The key figures: for household-related services, as a rule 20 percent of up to 20,000 euros of labour costs per year qualify — a tax reduction of up to 4,000 euros annually. For tradesmen's services, it is 20 percent of up to 6,000 euros, i.e. up to 1,200 euros per year. Important: only labour, travel and machine costs qualify — material costs do not count. A further condition is cashless payment; for operating costs settled via the property manager, this is regularly fulfilled.

Typical statement items that regularly come into consideration:

• Caretaker — household-related service.
• Stairwell and building cleaning — household-related service.
• Garden maintenance — household-related service.
• Winter service on the property — household-related service.
• Maintenance of heating, lift or smoke detectors — tradesmen's service.
• Chimney sweep — tradesmen's service.

How to transfer the figures into your tax return

The path from statement item to tax saving is straightforward and done in a few steps:

• Have your statement ready: many property managers already show the shares eligible under Section 35a EStG separately — as a dedicated breakdown or certificate accompanying the statement.
• Enter the amounts: in the German income tax return, the figures belong in the annex “Haushaltsnahe Aufwendungen” (household-related expenses) — separated into household-related services and tradesmen's services.
• Keep the documents: as a rule, you do not have to submit the statement itself — but the tax office may request it.
• Timing: if the statement only arrives in the following year, the tax authorities regularly accept claiming the amounts in the year in which you received the statement.

Why it pays off — a short example

The tax reduction under Section 35a EStG is deducted directly from your assessed income tax — it does not merely reduce your taxable income, it counts euro for euro. If your statement contains, say, 400 euros of eligible labour costs for the caretaker, cleaning and garden maintenance, that can translate into 80 euros less income tax — year after year, for a few minutes of effort.

How the deduction plays out in your specific case depends on your personal situation. This overview is general information and not tax advice — only professional tax advice can assess it with certainty.

Lowering your costs: what you control yourself

Besides the tax break, there is a second lever: your own behaviour. A considerable part of the statement depends on consumption — and can therefore be influenced directly:

• Heat sensibly: every degree less room temperature noticeably lowers heating costs — as a rule of thumb by around six percent. Lower the temperature at night and when you are out, rather than switching off entirely.
• Short bursts of ventilation instead of tilted windows: opening the windows wide for a few minutes several times a day exchanges the air without cooling down the walls — good for heating costs and the best prevention against mould.
• Use hot water consciously: shorter showers instead of baths, a water-saving shower head — hot water is one of the most expensive items in any household.
• Separate your waste: well-sorted waste keeps the residual waste bins small — and their number and size help determine the waste costs of the whole building.
• Lights and lift: do not leave the stairwell light on unnecessarily, and take the stairs for one or two floors — small amounts that add up across the building.

Your statement at KF Properties

Tenants of KF Properties find their operating cost statement in the online portal — permanently available, together with the statements of previous years. We prepare the shares relevant for Section 35a EStG so that you can use the figures directly for your tax return.

And if an item is unclear? Just ask. A short message via the portal or the contact form is enough — we are happy to explain what is behind a line item. A good statement should be understandable.