1. Which tax is levied on rental income?
In Germany, income tax (Einkommensteuer) is charged on the net profit from renting, not on the full amount of rent received.
You do not pay tax on the entire rent, but only on:
Profit = rental income – deductible expenses
2. Which expenses can be deducted from tax?
You can deduct all expenses that are directly related to the rented property, for example:
| Deductible expenses | Examples |
|---|---|
| Interest on property loan | Zinsen für Immobilienkredit |
| Annual property tax | Grundsteuer |
| Maintenance and repair costs | Reparaturen, craftsmen’s invoices |
| Property management fees | Hausverwaltung |
| Building and liability insurance | Gebäudeversicherung, Haftpflicht |
| Depreciation (AfA) | 2% per year of the building cost (unless special rules for new builds apply) |
| Advertising costs to find tenants | Anzeigen zur Mietersuche |
| Legal and tax advisory costs | Steuerberater, Notar |
3. Practical example
Annual rental income: €12,000
Annual expenses: €6,000
Taxable profit = €6,000
This profit is added to your total annual income and taxed according to your personal income tax rate (roughly 14% to 45%).
Which taxes do not apply?
| Type of tax | Applied? | Notes |
|---|---|---|
| Umsatzsteuer (VAT) | No | Residential letting is generally VAT-exempt |
| Gewerbesteuer | No | Renting out property is usually not treated as a trade |
4. Filing the tax return
You must file Anlage V as part of your income tax return (Einkommensteuererklärung). In this form you declare:
the annual rental income
the list of expenses (Werbungskosten)
details of the property
The return is filed once a year, typically online via ELSTER.de.
Are there special exemptions or rules?
If you do not make a profit (income equals or is lower than expenses), you pay no tax on renting – and the loss may reduce your overall tax burden.
If you rent to relatives at a low rent, the rent must be at least 66% of the local market rent in order to fully deduct the expenses.
Do you have to file a return every year?
In practice, yes, if:
you rent out a property as a private individual, or
you own several rental properties.
Useful terms
| German term | Meaning in Arabic |
|---|---|
| Mieteinnahmen | إيرادات الإيجار |
| Werbungskosten | النفقات القابلة للخصم |
| Anlage V | استمارة دخل الإيجار في إقرار الدخل |
| AfA – Abschreibung | الاستهلاك المحاسبي السنوي |
| Eigenbedarf | الاستخدام الذاتي للعقار |
| Steuerfreie Vermietung | تأجير معفى من الضريبة (private housing) |
The team of writers and editors on this website strives to provide accurate information based on thorough research and consultation of multiple sources. However, errors may still occur or some details may not be fully verified. For this reason, please treat the information in the articles as an initial reference and always consult the relevant authorities to obtain final, confirmed information.
