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# Interest on current accounts (e.g. overdraft interest)
Help on the Immodio entry item Interest on current accounts, a bank account (for example overdraft interest).
You use this category for **debit interest, overdraft interest and comparable overdraft charges on a bank account** as far as the negative account balance was actually caused by your **letting activity**.
A typical case is a bank account used for the letting activity that temporarily goes into the red because, for example:
* a larger tradesman's invoice,
* an insurance invoice,
* running property costs,
* a back payment,
* or other letting-related expenditure
is paid before sufficient rental income or other funds arrive in the account again.
Under Section 9 EStG, debt interest can in principle be income-related expenditure as far as the underlying liability is economically connected with the type of income concerned.
#### **A typical case: the letting account is overdrawn briefly**
* Your bank account used exclusively for the letting activity holds: **€2,000**
* You pay a letting-related repair invoice of: **€6,000**
That temporarily produces a negative account balance.
The bank charges you for this: **€80 of overdraft interest**
Since the overdraft arose from an expense of your letting activity, the **€80** can be posted to the **"Interest on current accounts, a bank account (for example overdraft interest)"** category.
#### **What is decisive is what put the account into the red**
The treatment for tax does not depend solely on **what the bank account is called**.
An account that you keep as a "rent account" or "property account" can also contain private transactions.
What is important with current accounts is whether the debit balance was caused by letting-related or private payments. Where **private** expenditure is paid from an account that is actually letting-related and a debit balance arises or grows as a result, the debt interest attributable to it **cannot** be attributed to the letting activity.
**Example: a private expense causes the overdraft**
* Your letting account holds: **€1,000**
* From it you pay for a holiday trip **privately** for: **€3,000**
The account is then **€2,000** in the red.
The bank charges **€40 of overdraft interest**
This interest is **not** income-related expenditure of the letting activity because the negative account balance was caused by a **private expense**. The interest attributable to it therefore does **not** belong in this category.
#### **A separate letting account makes the assignment easier**
In practice it is particularly helpful to handle the payments of the letting activity through a **bank account of its own** where possible.
Where the following alone are handled through it:
* rental income,
* tradesmen's invoices,
* insurance,
* property costs,
* financing payments,
* and other letting transactions
, it is considerably easier to show that a temporary overdraft was also caused by the letting activity.
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#### **A bank account used for mixed purposes**
Where you use the same current account both:
* privately
* and for your letting activity,
the overdraft interest has to be split according to what **occasioned it economically**.
The assessment "30% of my account movements concern the letting activity, so I claim 30% of the overdraft interest." would be **wrong** in this case. With a mixed current account it is in principle necessary to examine which payments caused the negative account balance concerned.
#### **The distinction from ordinary loan interest**
Immodio additionally has the category **"Debt interest, interest on a bank loan, loan or credit"**
**The two categories should be kept cleanly separate from each other.**
* Where overdraft or debit interest arises because of a negative bank account, post it to the category → "Interest on current accounts, a bank account (for example overdraft interest)".
* Where interest arises on a property, bank or other loan expressly taken out, post it to the category → "Debt interest, interest on a bank loan, loan or credit".
* Immodio also has the category **"Other interest and similar expenditure".** That category is intended for other letting-related interest charges that constitute neither classic loan interest nor overdraft interest on a bank account.
#### **Overdraft interest on an account that is actually private can also be relevant**
It is not strictly necessary for the account concerned to have been set up exclusively for the letting activity.
Where clearly letting-related expenditure is financed through a private account and it is precisely that payment that leads to a corresponding debit balance, there can in principle be an economic connection between the interest attributable to it and the letting activity.
With an account used for mixed purposes, however, the evidence is considerably more onerous.
#### **Assignment in Immodio**
With this category the assignment is to the **owner**. Select the owner whose letting activity the overdraft is actually attributable to.
#### **Do not recover from the tenant**
Overdraft and current account interest is the **owner's financing cost**.
It arises because the landlord overdraws their bank account and not from the running intended use of the let property.
The **"Recoverable in the operating cost statement"** switch therefore has to stay **disabled**.
#### **Which documents should you keep?**
Keep in particular:
* **account statements** with the debit or overdraft interest charged,
* the bank's interest statements,
* where applicable the contract or the terms of the overdraft or current account facility,
* receipts for the expenditure that caused the negative account balance,
* with an account used for mixed purposes, a comprehensible **split between private and letting-related account movements**,
* where applicable a calculation of the interest share attributable to the letting activity,
* and with several owners, the clear assignment to the owner concerned.
That keeps it comprehensible later **why the negative account balance arose and which part of the overdraft interest charged is actually attributable to your letting activity**.
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