Asked about German rental income taxation (Vermietung und Verpachtung).
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Standard filing deadline (self-filed)
31 July of the following year
Filing deadline with Steuerberater
End of February of the year after next
Tax form for rental income
Anlage V (Einkünfte aus Vermietung und Verpachtung)EStG §21
Tax year
Calendar year: 1 January – 31 December
Grundfreibetrag (basic personal allowance) — 0% band upper limit
EUR 12,096
Progressive zone 1 — income range
EUR 12,097 – EUR 17,443
Progressive zone 1 — marginal rate range
14% – 24%
Progressive zone 2 — income range
EUR 17,444 – EUR 66,760
Progressive zone 2 — marginal rate range
24% – 42%
Flat rate band — income range
EUR 66,761 – EUR 277,825
Flat rate band — marginal rate
42%
Reichensteuer band — income threshold
EUR 277,826+
Reichensteuer band — marginal rate
45%
Solidaritätszuschlag (Soli) rate
5.5% of income tax
Solidaritätszuschlag Freigrenze — singles
EUR 18,130 of income tax
Solidaritätszuschlag Freigrenze — married filing jointly
EUR 36,260 of income tax
Kirchensteuer rate (applicable states)
8% or 9% of income tax
AfA rate — residential building completed after 31 December 2022
3% per year (linear); useful life 33⅓ yearsEStG §7 Abs. 4
AfA rate — residential building completed 1 January 1925 – 31 December 2022
2% per year (linear); useful life 50 yearsEStG §7 Abs. 4
AfA rate — residential building completed before 1 January 1925
2.5% per year (linear); useful life 40 yearsEStG §7 Abs. 4
AfA rate — commercial building (any date)
3% per year (linear); useful life 33⅓ yearsEStG §7 Abs. 4
Degressive AfA rate — residential buildings with Bauantrag or Kaufvertrag from 1 October 2023
5% degressive on remaining book value each yearEStG §7 Abs. 5a
Degressive AfA — earliest qualifying Bauantrag/Kaufvertrag date
1 October 2023EStG §7 Abs. 5a
Degressive AfA — permitted switch to linear rate
Switch to linear AfA (3%) permitted at any timeEStG §7 Abs. 5a
AfA start — pro-rata first year
Annual AfA × (remaining months / 12); begins in month of acquisition or completion
Travel to property — mileage rate (one way)
0.30 EUR/km (one way)
Anschaffungsnahe Herstellungskosten — 15% rule threshold
15% of building purchase price (net of VAT) within first 3 years after acquisitionEStG §6 Abs. 1 Nr. 1a
Anschaffungsnahe Herstellungskosten — look-back period
First 3 years after acquisitionEStG §6 Abs. 1 Nr. 1a
Erhaltungsaufwand — optional spreading period
2 to 5 years (§82b EStDV)EStDV §82b
Full Werbungskosten deduction threshold — minimum rent as % of market rent
≥66% of ortsübliche MarktmieteEStG §21 Abs. 2
Conditional full deduction band (Totalüberschussprognose required)
50% – 65% of ortsübliche MarktmieteEStG §21 Abs. 2
Proportional split required — rent below threshold
<50% of ortsübliche MarktmieteEStG §21 Abs. 2
Furniture useful life for AfA (Möblierungszuschlag)
Typically 10 years (10% per year) or per actual useful life
Loss carry-back (Verlustrücktrag) — single taxpayer cap
EUR 1,000,000 to the prior yearEStG §10d
Loss carry-back (Verlustrücktrag) — married jointly cap
EUR 2,000,000 to the prior yearEStG §10d
Loss carry-forward (Verlustvortrag) — carry-forward period
Unlimited carry-forward to future yearsEStG §10d
Loss carry-forward — Mindestbesteuerung offset limit
EUR 1,000,000 + 60% of excess taxable income above EUR 1,000,000EStG §10d
Spekulationssteuer — holding period for tax-free sale of rental property
After 10 years from acquisition (sale within 10 years is taxable)EStG §23
Spekulationssteuer — self-occupied property exemption period
≥2 full calendar years of self-occupation plus year of saleEStG §23
VAT rate on commercial lettings (optional to tax)
19%UStG §9
VAT treatment of residential lettings
VAT-exemptUStG §9
Quick Reference
| Field | Value |
|---|---|
| Country | Germany (Bundesrepublik Deutschland) |
| Tax | Einkommensteuer auf Einkünfte aus Vermietung und Verpachtung |
| Currency | EUR only |
| Tax year | Calendar year (1 January -- 31 December) |
| Primary legislation | Einkommensteuergesetz (EStG) §21 (rental income), §7 Abs. 4 (AfA), §9 (Werbungskosten) |
| Supporting legislation | EStG §§2, 7, 9, 10d (Verlustvor-/rücktrag), 11 (Zufluss-/Abflussprinzip), 21 Abs. 2 (verbilligte Vermietung); EStDV §82b (Erhaltungsaufwand Verteilung) |
| Tax authority | Finanzamt (local tax office) |
| Filing portal | ELSTER (elster.de) |
| Filing deadline | 31 July of the following year (with Steuerberater: end of February year after next) |
| Tax form | Anlage V (Einkünfte aus Vermietung und Verpachtung) to the Einkommensteuererklärung |
| Validated by | Pending — requires sign-off by a German Steuerberater |
| Skill version | 1.0 |
Income Tax Rates (2025)
| Taxable income (EUR) | Marginal rate |
|---|---|
| 0 -- 12,096 | 0% (Grundfreibetrag) |
| 12,097 -- 17,443 | 14% -- 24% (progressive zone 1) |
| 17,444 -- 66,760 | 24% -- 42% (progressive zone 2) |
| 66,761 -- 277,825 | 42% |
| 277,826+ | 45% (Reichensteuer) |
Plus Solidaritätszuschlag (5.5% of income tax, with Freigrenze of EUR 18,130 tax for singles / EUR 36,260 for married filing jointly) and Kirchensteuer (8% or 9% of income tax if applicable).
Net rental income is added to all other income and taxed at the personal marginal rate.
Conservative Defaults
| Ambiguity | Default |
|---|---|
| Unknown building year (Baujahr) | STOP — AfA rate depends on this |
| Unknown Grundstücksanteil (land value) | STOP — land is not depreciable |
| Unknown whether Erhaltungsaufwand or Herstellungskosten | Treat as Herstellungskosten (capitalise, not immediately deduct) |
| Unknown verbilligte Vermietung percentage | STOP — affects Werbungskosten deductibility |
| Unknown whether commercial or residential | Treat as residential |
Linear AfA Rates (§7 Abs. 4 EStG)
| Building type | Fertigstellung (completion) | AfA rate | Useful life |
|---|---|---|---|
| Residential (Wohngebäude) | After 31 December 2022 | 3% per year | 33⅓ years |
| Residential | 1 January 1925 -- 31 December 2022 | 2% per year | 50 years |
| Residential | Before 1 January 1925 | 2.5% per year | 40 years |
| Commercial (nicht Wohnzwecke) | Any date | 3% per year | 33⅓ years |
Kaufpreisaufteilung: The split between land and building is critical. Methods:
The Finanzamt may challenge the split if the building proportion appears too high.
Fully Deductible Expenses
| Expense | German term | Notes |
|---|---|---|
| Mortgage interest (Schuldzinsen) | Darlehenszinsen | Interest only — principal repayment is NOT deductible |
| AfA depreciation | Absetzung für Abnutzung | Per §7 Abs. 4 rates |
| Property tax | Grundsteuer | Annual property tax paid to municipality |
| Building insurance | Gebäudeversicherung | Fire, storm, water damage |
| Landlord liability insurance | Haus- und Grundbesitzerhaftpflicht | |
| Property management | Hausverwaltung | Monthly management fees |
| Accountancy fees | Steuerberatungskosten | Attributable to Anlage V |
| Legal fees (tenancy disputes) | Rechtsanwaltskosten | Revenue legal costs |
| Advertising for tenants | Inseratskosten | Immobilienscout24, newspaper |
| Travel to property | Fahrtkosten | 0.30 EUR/km (one way) for property inspections |
| Bank account fees | Kontoführungsgebühren | If dedicated rental account |
| Condominium management reserve (Hausgeld -- Verwaltungsanteil) | Nicht umlagefähiges Hausgeld | Portion not passed to tenant |
Erhaltungsaufwand vs Herstellungskosten
| Erhaltungsaufwand (Revenue Repair) | Herstellungskosten (Capital Improvement) |
|---|---|
| Restores to original condition | Creates something new or substantially improves |
| Immediately deductible as Werbungskosten | Must be capitalised and depreciated via AfA |
| Option to spread over 2--5 years (§82b EStDV) | Added to AfA basis |
| Painting, replacing broken heating, fixing roof leak | Adding a balcony, converting attic, installing elevator |
| Replacing old windows with equivalent | Upgrading single glazing to triple glazing (if substantial improvement) |
Non-Deductible Items
| Item | Reason |
|---|---|
| Principal repayments (Tilgung) | Loan repayment, not expense |
| Grunderwerbsteuer (on acquisition) | Part of acquisition cost (AfA basis) |
| Private living costs | Not related to rental activity |
| Fines / penalties (Bußgelder) | Public policy |
| Income tax itself | Tax on income |
| Hausgeld — tenant-reimbursable portion (umlagefähig) | Already passed through to tenant |
Verbilligte Vermietung thresholds (§21 Abs. 2 EStG)
| Actual rent as % of ortsübliche Marktmiete | Werbungskosten treatment |
|---|---|
| ≥66% of market rent | Full Werbungskosten deduction (treated as fully commercial) |
| 50% -- 65% of market rent | Full deduction ONLY if Totalüberschussprognose (lifetime profit forecast) is positive; otherwise proportional |
| <50% of market rent | Proportional split: entgeltlicher Teil (paid portion) gets Werbungskosten; unentgeltlicher Teil (free portion) does not |
If a property is let furnished:
Income Patterns (Credits)
| Pattern | Treatment | Notes |
|---|---|---|
| MIETE, KALTMIETE, MONATSMIETE | Rental income (Einnahmen) | Base rent — include in Anlage V |
| NEBENKOSTEN, BETRIEBSKOSTEN, HAUSGELD (tenant portion) | Rental income | Pass-through costs are income AND expense |
| NACHZAHLUNG NEBENKOSTEN | Rental income | Year-end settlement surplus from tenant |
| KAUTION, MIETKAUTION | EXCLUDE if refundable | Security deposit — not income unless retained |
| MÖBLIERUNGSZUSCHLAG | Rental income | Furniture premium — part of gross rent |
Expense Patterns (Debits)
| Pattern | Category | Anlage V Line | Notes |
|---|---|---|---|
| DARLEHENSZINSEN, HYPOTHEKENZINSEN, BANKZINSEN | Schuldzinsen | Zeile 37 | Mortgage interest — fully deductible |
| GRUNDSTEUER | Grundsteuer | Zeile 47 | Municipal property tax |
| HAUSVERWALTUNG, VERWALTUNGSKOSTEN | Hausverwaltung | Zeile 47 | Management fee |
| GEBÄUDEVERSICHERUNG, WOHNGEBÄUDEVERSICHERUNG | Versicherung | Zeile 47 | Building insurance |
| REPARATUR, INSTANDHALTUNG, HANDWERKER | Erhaltungsaufwand | Zeile 40 | Revenue repairs (check 15% rule) |
| MAKLERGEBÜHR (tenant search) | Maklerkosten | Zeile 47 | Deductible when seeking new tenant |
| HAUSGELD (nicht umlagefähig) | Verwaltungskosten | Zeile 47 | Non-recoverable portion of condo charges |
| STEUERBERATER (Anlage V) | Steuerberatung | Zeile 47 | Tax advisor fees for rental income |
| GRUNDBUCH, NOTAR (mortgage refinancing) | Finanzierungskosten | Zeile 37 | Deductible if related to rental financing |
| GARTENPFLEGE, WINTERDIENST | Betriebskosten | Zeile 47 | If not recovered from tenant |
| FAHRTKOSTEN (to property) | Fahrtkosten | Zeile 47 | 0.30 EUR/km one way |
Exclusions
| Pattern | Treatment |
|---|---|
| TILGUNG, DARLEHENSRÜCKZAHLUNG | EXCLUDE — principal repayment |
| GRUNDERWERBSTEUER (on purchase) | Add to AfA basis — not immediate expense |
| INTERNAL TRANSFER, EIGENES KONTO | EXCLUDE |
| KAUTION RÜCKZAHLUNG | EXCLUDE — deposit refund |
| EINKOMMENSTEUER, KIRCHENSTEUER, SOLI | EXCLUDE — personal taxes |
Verlustverrechnung (Loss Offset) rules (§10d EStG)
| Rule | Detail |
|---|---|
| Horizontal loss offset | Rental losses can offset other rental income in the same year |
| Vertical loss offset | Rental losses can offset OTHER income types (employment, self-employment) in the same year |
| Loss carry-back (Verlustrücktrag) | Up to EUR 1,000,000 (single) / EUR 2,000,000 (married jointly) to the prior year (§10d EStG) |
| Loss carry-forward (Verlustvortrag) | Unlimited carry-forward to future years; offset limited by Mindestbesteuerung (EUR 1M + 60% of excess) |
| Liebhaberei risk | If property shows losses year after year with no realistic prospect of profit, Finanzamt may classify as Liebhaberei (hobby) and deny deductions retroactively |
The ability to offset rental losses against salary income is a core feature of German Immobilien-Steuerplanung, especially in the early years when AfA + Schuldzinsen often exceed rental income.
Input: Apartment completed January 2023. Purchase price EUR 400,000 (building EUR 300,000, land EUR 100,000). Annual rent (Kaltmiete + NK): EUR 14,400. Mortgage interest: EUR 8,000. Grundsteuer: EUR 600. Insurance: EUR 400. Hausverwaltung: EUR 1,200.
Computation:
Einnahmen: EUR 14,400
Werbungskosten:
AfA (3% × EUR 300,000): EUR 9,000
Schuldzinsen: EUR 8,000
Grundsteuer: EUR 600
Versicherung: EUR 400
Hausverwaltung: EUR 1,200
Total Werbungskosten: EUR 19,200
Einkünfte aus V+V: EUR 14,400 - EUR 19,200 = EUR -4,800 (loss)
This EUR 4,800 loss can offset other income (salary, etc.), reducing the overall tax burden.
Input: Building from 1965 (AfA 2%). Building value EUR 200,000. Rent EUR 9,600. New heating system (Heizungsanlage replacement): EUR 12,000 — like-for-like replacement = Erhaltungsaufwand. Owner elects to spread over 5 years (§82b EStDV).
Computation:
Einnahmen: EUR 9,600
Werbungskosten:
AfA (2% × EUR 200,000): EUR 4,000
Erhaltungsaufwand (EUR 12,000 / 5): EUR 2,400
Other expenses: EUR 2,000
Total: EUR 8,400
Einkünfte: EUR 9,600 - EUR 8,400 = EUR 1,200
Input: Apartment let to daughter at EUR 400/month. Ortsübliche Marktmiete (Mietspiegel): EUR 700/month. Ratio: 400/700 = 57%.
Analysis: 57% is between 50% and 66%. A Totalüberschussprognose is required. If the lifetime profit forecast is positive, full Werbungskosten apply. If negative, only 57% of Werbungskosten are deductible.
Input: Property purchased for EUR 250,000 (building EUR 180,000). In Year 2, renovation costs of EUR 30,000 (bathroom + kitchen renovation).
Test: EUR 30,000 / EUR 180,000 = 16.7% > 15% threshold.
Result: Even if the renovation would otherwise be Erhaltungsaufwand, it is reclassified as Herstellungskosten. The EUR 30,000 is added to the AfA basis (EUR 180,000 + EUR 30,000 = EUR 210,000) and depreciated over the remaining useful life.
Anlage V Key Lines
| Zeile | Content |
|---|---|
| Zeile 4-6 | Property address and type |
| Zeile 9 | Mieteinnahmen für Wohnungen (residential rent) |
| Zeile 13 | Umlagen/Nebenkosten (pass-through costs received) |
| Zeile 31 | AfA für Gebäude |
| Zeile 33 | AfA für bewegliche Wirtschaftsgüter (furniture, equipment) |
| Zeile 37 | Schuldzinsen (mortgage interest) |
| Zeile 39 | Geldbeschaffungskosten (loan arrangement fees) |
| Zeile 40 | Erhaltungsaufwand (revenue repairs) |
| Zeile 41 | Verteilung Erhaltungsaufwand (spread over 2-5 years) |
| Zeile 46 | Hausgeld (non-recoverable condo charges) |
| Zeile 47 | Sonstige Werbungskosten (other deductible expenses) |
| Zeile 50 | Überschuss/Verlust (net income or loss) |
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