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You let a flat or a house

Letting a property and paying tax on it

Understand rental income and the landlord's tenancy law, compute building depreciation, acquisition-related production costs, the spreading of maintenance expenses, the reduced-rent threshold and the permitted rent increase, and declare the income: 8 steps.

Start here: Rental income from letting property in Germany

Understand: rental income, tenancy law for landlords

  1. Step 1 of 8
    CoursePaid individually65 min

    Rental income from letting property in Germany

    Rental receipts minus expenses, with no flat-rate allowance: what counts as a receipt, when it is received and why a rent below 50 percent of the local rent costs deductions while one from 66 percent does not. The second module covers loan interest, depreciation, the 15 percent threshold for acquisition-related production costs and spreading larger repairs over two to five years. The third covers the 5 percent special depreciation for new rental flats, losses and VAT on a holiday flat. Three modules, each with a fully worked case study.
  2. Step 2 of 8
    CoursePaid individually62 min

    German landlord law: deposit, charges, rent rises, notice

    The deposit is capped at three months' net rent, payable in instalments and to be invested separately; operating costs must be settled within twelve months, or any additional claim is lost. The second module covers the increase to the local comparative rent with its cap and consent period, the rent brake on re-letting, and graduated and index-linked rent. The third covers the modernisation surcharge with its per-square-metre cap, and termination with a legitimate interest and notice periods that grow with the tenancy. Three modules with case studies worked on the statute itself.

Compute: building depreciation, acquisition-related costs, maintenance, reduced rent, rent cap

  1. Step 3 of 8
    CalculatorFree result

    German building depreciation — 2, 2.5 or 3 percent, or 5 percent declining

    The straight-line rate follows the completion date, not the purchase date: 3 percent for business buildings not used as housing and for buildings completed after 31 December 2022, 2 percent for completions from 1925 to 2022, 2.5 percent before that. New residential buildings on which construction started between October 2023 and September 2029 may instead be written down at 5 percent of the remaining book value.
  2. Step 4 of 8
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    Renovation soon after buying a German property — the 15% rule

    If repair and modernisation costs within three years of purchase exceed, net of VAT, 15% of the building's acquisition cost, all of them become construction costs and can only be depreciated. Routine maintenance that recurs every year does not count.
  3. Step 5 of 8
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    Spreading major repair costs on a German rental home — EStDV s. 82b

    Major maintenance costs on a building held privately and used mainly as housing may be spread evenly over two to five years. If the building is sold during that period, the remaining balance is deducted in the year of sale.
  4. Step 6 of 8
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    Letting below market rent in Germany — the 50% and 66% thresholds

    Below 50% of the local market rent the letting is split: expenses are deductible only in proportion to the rent actually paid. From 66%, a letting intended to last is deemed fully for consideration.
  5. Step 7 of 8
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    German rent increase check — the cap and the local comparative rent

    Two ceilings apply at once and the lower one wins: the local comparative rent, and the cap of 20 percent (15 percent in designated areas) measured against the rent of three years earlier.

File: income tax return

  1. Step 8 of 8
    FormFree75 min

    German income tax return (ESt 1 A)

    The calendar year is what gets assessed: why the self-employed and traders MUST file electronically, when spouses file one joint return, and from when the objection period runs. Guide, deadlines and worked example.

The other paths

A different procedure, the same principle: the three pillars in order.

Read in German