Annual Rent Income
14.400,00 €
Income Tax on Rental Income
495,00 €
Net Rental Income
905,00 €
How is rental income taxed in Germany?
Rental income (Einkuenfte aus Vermietung und Verpachtung) is added to your other income and taxed at your personal income tax rate. You can deduct expenses like maintenance, insurance, property management, depreciation (AfA), and mortgage interest from the rental income before calculating tax.
What is the depreciation rate (AfA) for rental properties?
For buildings completed before January 1, 2023, the linear depreciation rate is 2% per year (over 50 years). For buildings completed on or after January 1, 2023, the rate increased to 3% per year (over approximately 33 years). Only the building value is depreciated, not the land value.
Can I deduct mortgage interest on rental properties?
Yes, mortgage interest on loans used to purchase or renovate rental properties is fully deductible as Werbungskosten (income-related expenses). This is one of the biggest tax advantages of property investment in Germany. The principal repayment, however, is not deductible.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
How rental income is taxed, what you can deduct, and AfA for landlords
How is rental income taxed in Germany?
Rental income (Einkünfte aus Vermietung und Verpachtung) is added to your other income and taxed at your personal progressive rate (14% to 45%). If you earn €50,000 from employment and €12,000 net rental income, you pay tax on €62,000 total. The rental income is taxed at your marginal rate, which could be 35% or more.
What expenses can landlords deduct?
Deductible expenses include: mortgage interest (not the repayment), building depreciation (AfA), maintenance and repairs, property management fees, insurance, Grundsteuer (property tax), advertising for tenants, travel to the property, and furnishing costs. On rental income of €15,000, deductions of €8,000 leave only €7,000 taxable.
How does building depreciation (AfA) work for rental properties?
Residential buildings built after 1924 are depreciated at 2% per year over 50 years. Buildings completed from 2023 onwards use 3% over 33 years. Only the building is depreciated — not the land. A property bought for €300,000 with 30% land value means €210,000 depreciable, giving you €6,300 per year (at 3%) in tax deductions for 33 years.
Can you create a tax loss from rental property?
Yes, if your deductible expenses exceed your rental income, you create a Verlust (loss) that can offset your other income. This is common in the early years when mortgage interest is high. A rental loss of €5,000 can reduce your taxable employment income from €50,000 to €45,000, saving about €1,750 in tax at a 35% rate.
What about VAT on rental income?
Residential rentals are VAT-exempt in Germany — you do not charge VAT on residential rent. Commercial rentals can optionally include 19% VAT if the tenant uses the space for VAT-taxable business (Option zur Umsatzsteuerpflicht). Opting for VAT lets you reclaim Vorsteuer on renovation and purchase costs, which can save significant amounts on expensive projects.
When is rental income from selling property taxed?
If you sell a property within 10 years of purchase (Spekulationsfrist), the profit is taxed at your personal income tax rate. After 10 years, the gain is completely tax-free. If you lived in the property yourself in the last 3 years before selling, the gain is also tax-free regardless of the holding period. A €100,000 gain within 10 years could cost €35,000 to €45,000 in tax.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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