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Arenja & Raj Finanz

Does this rental property actually pay?

Rent minus costs minus the loan, with the tax effect on top — what the flat puts in your pocket each month, or takes out of it.

✓ Free, no sign-up✓ Official 2026 figures✓ Nothing is stored

The property

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€

The Kaltmiete — what the tenant pays you before heating and utilities.

2.0 %
2 % standard7 % with appraisal

Costs you carry

€
€

Both per month, and both the parts you cannot pass to the tenant. For an apartment they are on the Hausgeld statement — ask the seller for the split between allocable and non-allocable costs.

€

Your financing

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%
%
€

Needed for the tax side — rental losses are set against your other income.

Monthly cash flow after tax

€0/ month

Rent received –
Costs you carrymanagement and maintenance reserve –
Loan paymentinterest plus repayment –
Before tax –
Tax effectdepreciation and interest against your income –
After tax –
Gross yield
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Net yield
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Loan
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Bring the listing and we will run these numbers against real bank terms, the actual purchase price split and the service charge statement.

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How this is calculated
  • Total investment: purchase price plus transfer tax at your state's rate, 2.0 % for notary and land registry, and 3.57 % agent commission if you use one. Your own funds come off that; the rest is the loan.
  • Loan payment: interest plus repayment on the full loan, as in year one. Only the interest part is tax deductible — repayment is not a cost, it buys you equity.
  • Costs you carry: the management fee and maintenance reserve you enter, both of which are the non-allocable parts you cannot pass to the tenant. Service charges the tenant pays are excluded on both sides. Note that no allowance for empty months is included — if you want one, add it to the reserve figure.
  • Depreciation (AfA): the building is written off every year; land never is. We assume the building is 80 % of the price and the land 20 %, a common split that varies a lot by location — the real figure comes from your purchase contract or a valuation.
  • Why the rate is yours to set: the statutory rates are 2.5 % before 1925, 2.0 % from 1925 to 2022 and 3.0 % from 2023. Above those, § 7 (4) sentence 2 EStG lets you depreciate over a shorter actual remaining useful life if a surveyor documents one — 20 years remaining means 5 % a year instead of 2 %. The restrictive 2023 ministry guidance on these reports was withdrawn on 1 December 2025, so what counts now is the law and the federal tax court's rulings. Move the slider to see what a report would be worth on this property before you pay for one.
  • Tax effect: rent minus running costs, interest and depreciation gives your taxable rental result, usually negative in the early years. That loss reduces your other taxable income, and we value it with the official 2026 income tax formula (§ 32a EStG). It ignores your tax class, marital status, church tax and any other income.
  • How the tax relief is worked out: we do not multiply your costs by a single rate. We calculate your tax with the deduction and without it, and take the difference — which is what the tax office actually does. For small amounts the result is close to your marginal rate. For large ones it is lower, because the deduction pushes your income down through the progressive tariff and the last euros of it save tax at a lower rate than the first. Both figures are shown so you can see the gap.
  • Renovation (Erhaltungsaufwand): repairs and modernisation are normally deducted in full in the year you pay them. The catch is § 6 (1) no. 1a EStG: if such work exceeds 15 % of the building's acquisition cost, net of VAT, within three years of buying, the entire amount is reclassified as acquisition cost and can only be written off through depreciation over decades. The calculator shows the threshold for your property and flags when you cross it.
  • What moves later: this is year one. As the loan shrinks, the interest deduction falls and your tax relief with it, while rent and property values may move either way.

Buy-to-let in Germany: the questions people actually ask

What counts as a good rental yield in Germany?

Gross yield is annual cold rent divided by the purchase price. In major German cities, flats commonly trade between 2.5 % and 4 %; smaller cities and rural areas reach 5 % and above. A low yield is not automatically a bad deal — it usually means the market is pricing in expected capital growth — but it does mean your return depends on the location holding up rather than on the rent. Net yield, which subtracts the costs you cannot pass to the tenant and adds the purchase costs to the investment, is the more honest number and typically lands about a percentage point lower.

How does depreciation work, and which rate applies to me?

You write off the building against your rental income every year; the land is never depreciable. The statutory rates depend on when the building was completed: 2.5 % before 1925, 2.0 % from 1925 to 2022, and 3.0 % from 2023 onwards. Purchase costs are capitalised and depreciated along with the building, in proportion to the building's share of the price. The split between building and land comes from your purchase contract or a valuation and varies a great deal by location.

Can I depreciate faster than the standard rate?

Yes. Section 7 (4) sentence 2 of the Income Tax Act lets you depreciate over the building's actual remaining useful life if a surveyor documents that it is shorter than the statutory assumption. Twenty years remaining means 5 % a year instead of 2 %, which on a €350,000 flat is several thousand euros of extra deduction annually. The restrictive ministry guidance from 2023 on these reports was withdrawn on 1 December 2025, so what governs now is the statute and the federal tax court's rulings, which have confirmed that no elaborate structural survey is required.

What is the 15 % rule and why does it matter?

This is the trap that catches most first-time landlords. Under section 6 (1) no. 1a of the Income Tax Act, if repair and modernisation work in the first three years after purchase exceeds 15 % of the building's acquisition cost — net of VAT — then the entire amount is reclassified as acquisition cost. Instead of deducting it immediately, you write it off over decades. Crossing the line by a few thousand euros can destroy a five-figure deduction, so the timing and sequencing of renovation work is worth planning before you instruct anyone.

Which costs can I deduct as a landlord?

Mortgage interest — but not the repayment portion, which buys you equity rather than costing you anything. Depreciation. Property management fees, the maintenance reserve when it is actually spent, letting costs, your accountant, travel to the property, and repairs that stay under the 15 % threshold. Service charges you pass to the tenant appear on both sides and cancel out. The costs you genuinely carry are the non-allocable ones: management, maintenance and the months a flat stands empty.

Do I pay tax when I sell?

If you have owned the property for more than ten years, the gain on a let property is free of income tax under section 23 of the Income Tax Act. Sell inside that window and the gain is taxed at your personal rate. Different rules apply to a property you lived in yourself. If you buy and sell several properties in a short period you risk being treated as a commercial property trader, which changes the tax treatment entirely — worth checking before the third transaction.

Can foreigners buy investment property in Germany?

Ownership is open to anyone regardless of citizenship or residence. Financing depends on your residence status, income and credit history, and lenders treat investment property more conservatively than an owner-occupied home — expect higher equity requirements. Rental income from a German property is taxable in Germany whether or not you live here, and a double taxation agreement usually determines how your home country treats it.

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