1. What tax is charged on rental income?
Rental income is subject to income tax (Einkommensteuer) on the net profit, not on the full rent.
You pay tax on:
Profit = rental income – deductible expenses
Any cost related to the rental property:
| Deductible expenses | Examples |
|---|---|
| Loan interest | Mortgage interest |
| Property tax | Grundsteuer |
| Maintenance and repairs | Repairs, craftsmen |
| Property management | Hausverwaltung |
| Insurance | Building & liability insurance |
| Depreciation (AfA) | 2% per year of property value |
| Rental advertisements | Ads for tenant search |
| Legal / accounting fees | Tax advisor, notary |
• Annual rent: €12,000
• Annual expenses: €6,000
Taxable profit = €6,000
This profit is added to your total income and taxed at your personal income tax rate (14–45%).
| Type of tax | Charged? | Notes |
|---|---|---|
| VAT (Umsatzsteuer) | No | Residential rent is exempt |
| Trade tax (Gewerbesteuer) | No | Renting is not a commercial activity |
You must submit:
Anlage V (rental income form) within the income tax return.
Include:
• Annual rent
• All expenses
• Property details
Submit yearly via ELSTER.de.
• If your rental income equals or is lower than expenses → no tax, possible refund.
• Renting to relatives: rent must be at least 66% of market rent to deduct costs fully.
Yes, if:
• you rent out a property,
• or own multiple rental properties.
| German term | Meaning |
|---|---|
| Mieteinnahmen | Rental income |
| Werbungskosten | Deductible expenses |
| Anlage V | Rental income form |
| AfA | Depreciation |
| Eigenbedarf | Owner’s own use |
| Steuerfreie Vermietung | VAT-exempt residential rent |
— Our editorial team strives for accuracy, but errors are possible. Always verify with official authorities.
