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Finance & Investment

Strategies for successful real estate investments

Finance & tax is about the money behind your rental unit: how to work out the yield, plan your refinancing and declare your rental income on Anlage V. The articles cover deductible expenses, interest rate strategies and the documents a bank wants to see. The tax rules behind them are mainly found in § 21 EStG and § 7 EStG.

Updated: 10/27/2026 · By the CIRO editorial team

4 articles in this section

Finance tips

Articles on financing, taxes and returns on your rental property, by email.

Which tax rules and deadlines apply to landlords?

The limits from German income tax and loan law that matter most for rented flats.

Contents

Tax limits at a glance

Rental income counts as income from letting and leasing. From it you deduct every expense connected to the letting: loan interest, property tax, management costs, repairs and depreciation on the building. A few fixed limits decide whether an amount reduces your tax right away or is spread over many years. Land itself is never depreciated, only the building.

RuleValueProvision
Straight-line depreciation (AfA) on residential buildings2 % a year if completed between 1925 and 2022, 2.5 % before 1925, 3 % from 2023§ 7 (4) EStG
Declining-balance depreciation for new residential buildings5 % of the remaining value if construction starts between 1 October 2023 and 30 September 2029§ 7 (5a) EStG
Acquisition-related production costsrenovations within the first 3 years after purchase above 15 % of the building cost (excluding VAT) are depreciated instead of deducted at once§ 6 (1) no. 1a EStG
Larger maintenance expensescan be spread evenly over 2 to 5 years on application§ 82b EStDV
Letting below market rentfrom 66 % of the local rent full deduction of expenses, between 50 % and 66 % only with a positive profit forecast, below that a pro-rata cut§ 21 (2) EStG
Saletax-free if more than ten years lie between purchase and sale§ 23 (1) sentence 1 no. 1 EStG

When can you terminate a loan early?

With a fixed-interest period of more than ten years, § 489 (1) no. 2 BGB lets you terminate the loan ten years after it was paid out in full, with 6 months' notice and without an early repayment penalty. If the fixed-interest period ends sooner, you negotiate the refinancing when it ends, with your current bank or another one. The refinancing calculator shows how much a difference of one percentage point changes your monthly payment or the term.

For refinancing, the bank mainly checks whether the rental income covers the new payment. It usually asks for a current rent roll, the leases, your latest income tax assessments with Anlage V and information on the condition and maintenance of the property.

How do you calculate the yield?

Gross rental yield divides the annual net cold rent by the purchase price: €9,600 rent a year on a €240,000 purchase price gives 4 %. Net rental yield is more precise. It adds the ancillary purchase costs to the price and deducts from the rent the costs you cannot pass on to the tenant, such as management and the maintenance reserve. With €24,000 in ancillary purchase costs and €1,200 a year in non-recoverable costs, the same example comes to about 3.2 %.

Calculators, checklists and terms on this topic

All calculators and checklists are free and work without an account. Check a deadline or an amount before you write to your tenant.

Calculators

  • Depreciation (AfA): How much you depreciate on your rental building each year.
  • Follow-up financing: What your loan costs after the fixed-rate period, as a new payment or a new term.
  • Mortgage: Monthly payment, remaining debt after the fixed-rate period and a repayment schedule.
  • Gross rental yield: Annual base rent relative to the purchase price, the quick figure for every listing.
  • Net rental yield: Yield after closing costs, management, reserves and vacancy.
  • Closing costs: Real estate transfer tax, notary, land registry and agent for your state, plus the total you need.

Checklists

Glossary

  • Depreciation (AfA): AfA is tax depreciation on a rental building: 2, 2.5 or 3% a year straight-line, or 5% declining-balance for new builds. Land is never included.
  • Fixed-interest period (Zinsbindung): The fixed-interest period sets how long your loan rate stays fixed. The ten-year exit right, refinancing risk and forward loans explained.
  • Early repayment penalty (Vorfälligkeitsentschädigung): Repay a property loan before the fixed-rate period ends and the bank charges an early repayment penalty. When it does not apply and how to estimate it.
  • Speculation period (Spekulationsfrist): Sell a let property within ten years at a profit and the gain is taxable. How to calculate it and when living in the property yourself helps.
  • Loan repayment (Tilgung): Repayment is the part of each loan instalment that reduces the debt. A worked example of payment, balance and term, and why landlords cannot deduct it.
  • Rental yield (Rendite): Rental yield shows what share of the purchase price the rent earns each year. Gross and net yield worked through, plus the most common mistake.