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Everything you need to know about Rental Tax in Germany

Everything you need to know about Rental Tax in Germany

Tanya Jain881 18-Nov-2021

For several reasons, rental properties in Germany are in demand. People are taking more houses on rent. Hence, renting your place in Germany has become a very exciting way of earning money. People are investing their hard-earned money in a buy-to-let mortgage system. In Germany, you have to pay tax on every type of income you get in Germany.

Students from different corners of the world are flocking around Germany for study purposes. People are joining different farms for jobs here. So, the demand for rental properties is very high now. Many people are giving their properties for rent, and they have to pay a rental tax at the end of the year. Once the rental tax calculation is done according to the person’s property, another 5.5% added surcharge is put on the amount.

What is this buy-to-let property all about?

If you plan to give your property on rent, you become a part of the buy-to-let chain formed in Germany. Some people buy new properties just to give them on rent using Steuerberatung Vermietung. They are the third-party owners of the place. Now, if you are going to be a part of the chain, too, you need to pay a rental tax.

Now, the rental tax or Steuerberatung Vermietung is calculated depending on the amount of rent you will receive at the end of the month. As an owner of the renting property, you are eligible for a buy-to-let mortgage. This is a loan that is available for renting property owners in Germany. The amount is calculated based on the approximated rent per month on the same property.

In Germany, every type of income comes under the tax window. No matter which type of income it is, you need to pay a tax against it. Even if the property owner lives in the same property, the tax amount against the mortgage is not tax-deductible in Germany. However, the property owners can save a handful of money from the tax mortgage window. There are certain rules and regulations available for it.

Renovating a property and taxation related to it:

If you live in Germany and want to buy an old property, you can benefit from it. Before you give the property on rent, you need to redevelop it or renovate it. Now it bears a cost. Renovating an old property is quite pricey in Germany, and it can save you a lot of tax money as well. When you are renovating a property, you are investing money in it. That means it will hamper your renting amount and benefit out of that. But in Germany, tax amounts on these types of properties are calculated differently. You need to inform the tax department that you are going for an old wrecked place and have to remodel it before renting it.

If the total renovation cost is higher than 15% of the property’s value, then depreciation is allowed. This is a wonderful way to offset your renting tax amount. If you reach the tax office with the calculation, they will grant this as building depreciation under the AfA factor. Owners can place a claim of the production cost against the tax amount. In the case of Germany, the standard annual depreciation rate is 2 percent. If more than 2 percent is calculated, the property owner should reach the tax department for clarifications.

Tips and tricks for a buy-to-let mortgage in Germany:

Making the rental agreement is a task for the landowner. The owner needs to understand his rights and obligations before designing the rental agreement. He may place certain clauses to live on his land. He can allow the tenant to have a pet or not. The type of renting system also depends on the owner only. The owner may ask for a graduated renting facility.

The owner should make an agreement for at least 2 years. He should talk to the tenants and convince them about the minimum and maximum renting time. The renting agreement should bear all the clauses in detail, and the landowner should design it so that the tenant can easily understand the whole thing.

The landowner has all the rights to terminate the lease and evict the tenants even before the lease period ends. Though the eviction will be done as per the court’s order, the owner must produce enough reason behind it. The reason must be feasible so that the court releases an order in his favor. The landowner should give at least 3 months notice period to the tenants before evicting them out of the property.

The rental contract:

The rental contract includes some important information like the Name of both the parties, detailed information of the property, rent amount, duration of tenancy, caution, rules, and obligations, etc. Preformulated contracts are available in the market, and owners generally opt for these preformulated ones.

One can go ahead and customize the rental contract too! Different forms of rental contracts are available depending on the amount of rent and duration of rent. Both the parties should agree to the terms and conditions and must sign the rental contract.


This article includes all the minute details of rental tax and everything related to it in Germany. If you want to design the contract on your own, you can do that. Else, you may take Steuerberatung Vermietung from mortgage advisors of different companies. You can also contact any freelancing mortgage advisors available in Germany for the task.

Updated 18-Nov-2021
Hello! I'm a freelance writer with over 7 years of experience in all domains. I have a passion for words and reading- it's what inspires me to create the best possible content.

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