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TAX & BUSINESS
Hobby Activity Guidelines Maintenance Decree 2025
With the Maintenance Decree 2025, the hobby activity guidelines (Liebhabereirichtlinien, LRL) have been aligned with the economic stimulus package “Housing and Construction Offensive”.
Hobby activity (Liebhaberei) is assumed when an activity is not expected to generate a profit in the medium to long term. Such activities are disregarded for tax purposes. This means, on the one hand, that losses from such an activity may not be offset against other income. On the other hand, should a profit from hobby activity be realised, it is not taxable.
The hobby activity regulation (Liebhabereiverordnung) distinguishes between activities that are presumed to be a source of income (e.g. a restaurant business with a prolonged loss phase that nevertheless behaves market‑conformably and attempts to return to profitability) and activities with a rebuttable presumption of hobby activity (e.g. the rental of a sport aircraft).
Sonderfall Vermietung
A special case within hobby activity is rental. In the rental of rental houses (income‑producing property) income is presumed if a total profit is generated within a certain period. This also applies to the rental of individual owner‑occupied houses or condominiums. The relevant periods have been extended in the hobby activity regulation, which is why the LRL have been updated accordingly.
For the paid leasing of rental houses (large‑scale rental, income‑producing property) the foreseeable period is now a period of 30 years from the start of the paid lease, maximum 33 years from the first incurrence of expenses.
For the management of owner‑occupied houses, condominiums and rental residential properties with qualified usage rights (small‑scale rental) the foreseeable period is now 25 years from the start of the paid lease, maximum 28 years from the first incurrence of expenses. This extended period applies to activities where the foreseeable period begins after 31 December 2023. The extent of the foreseeable period is calculated on a date‑specific basis.
Example: In the context of a renovation and rental model, expenses first arise on 11 February 2024, while the rental only starts on 1 November 2025. In this case the foreseeable period covers the period from 11 February 2024 to 1 November 2055 (30 years from the start of the rental plus a little more than 20 months for the pre‑rental phase).
Forecast calculation of rental income and expenses
For the foreseeable period a forecast calculation must be prepared that covers all years of the foreseeable period. The forecast must include the expected rental income and expenses. If the forecast calculation shows no overall surplus, the activity must be treated as hobby activity for tax purposes from the outset. If the forecast figures are later under‑achieved in reality because of unforeseen events to which the landlord responds in a market‑conform manner, hobby activity is still not deemed to exist.
Note
A plausible, positive forecast calculation can be used to demonstrate to the tax office that the activity in question is not hobby activity, and therefore the profits and losses arising from it must be recognised for tax purposes. We recommend early planning and comprehensive advice in this regard.
The hobby activity regulation (Liebhabereiverordnung) distinguishes between activities that are presumed to be a source of income (e.g. a restaurant business with a prolonged loss phase that nevertheless behaves market‑conformably and attempts to return to profitability) and activities with a rebuttable presumption of hobby activity (e.g. the rental of a sport aircraft).
Sonderfall Vermietung
A special case within hobby activity is rental. In the rental of rental houses (income‑producing property) income is presumed if a total profit is generated within a certain period. This also applies to the rental of individual owner‑occupied houses or condominiums. The relevant periods have been extended in the hobby activity regulation, which is why the LRL have been updated accordingly.
For the paid leasing of rental houses (large‑scale rental, income‑producing property) the foreseeable period is now a period of 30 years from the start of the paid lease, maximum 33 years from the first incurrence of expenses.
For the management of owner‑occupied houses, condominiums and rental residential properties with qualified usage rights (small‑scale rental) the foreseeable period is now 25 years from the start of the paid lease, maximum 28 years from the first incurrence of expenses. This extended period applies to activities where the foreseeable period begins after 31 December 2023. The extent of the foreseeable period is calculated on a date‑specific basis.
Example: In the context of a renovation and rental model, expenses first arise on 11 February 2024, while the rental only starts on 1 November 2025. In this case the foreseeable period covers the period from 11 February 2024 to 1 November 2055 (30 years from the start of the rental plus a little more than 20 months for the pre‑rental phase).
Forecast calculation of rental income and expenses
For the foreseeable period a forecast calculation must be prepared that covers all years of the foreseeable period. The forecast must include the expected rental income and expenses. If the forecast calculation shows no overall surplus, the activity must be treated as hobby activity for tax purposes from the outset. If the forecast figures are later under‑achieved in reality because of unforeseen events to which the landlord responds in a market‑conform manner, hobby activity is still not deemed to exist.
Note
A plausible, positive forecast calculation can be used to demonstrate to the tax office that the activity in question is not hobby activity, and therefore the profits and losses arising from it must be recognised for tax purposes. We recommend early planning and comprehensive advice in this regard.