Germany Home Europe Germany Taxes and Costs Taxes on Foreigners' Real Estate Rental Income in Germany More DE × Germany Financial Overview Overview House Prices Market in Depth Rental Yields Income Tax et al Tax Example Taxes if Resident Buying Guide Landlord and Tenant Property Inheritance Country Statistics Property Investments Where to Buy Survey of Germany Berlin Frankfurt Hamburg Munich Key Contacts Accountants Lawyers Real Estate Agents Mortgages Tax on property income in Germany May 18, 2017 Effective Tax Rate on Rental Income Monthly Income €1,500 €6,000 €12,000 Tax Rate 2.71% 16.91% 23.16% Click here to see a worked example Source: Global Property Guide research INDIVIDUAL TAXATION Nonresident foreigners are taxed only on their German-sourced income. Married couples are assessed and taxed separately. INCOME TAX (Einkommenssteuer) Income earned by nonresident foreigners is taxed at progressive rates. INCOME TAX 2015 - INDIVIDUALS TAXABLE INCOME, (€) TAX RATE Up to €8,652 0% €8,652 – €13,669 14% €13,669 – €53,665 14% - 42% €53,665 – €254,446 42% Over €254,446 45% Source: Global Property Guide INCOME TAX 2016 - INDIVIDUALS TAXABLE INCOME, (€) TAX RATE Up to €8,652 0% €8,652 – €52,881 14% - 42% €52,881 – €250,730 42% Over €250,730 45% Source: Global Property Guide Solidarity Surcharge In addition to the income tax itself, a solidarity charge of 5.5% is also imposed on the levied income tax (i.e., not the taxable income), i.e. where the income tax rate is 25% the effective solidarity surcharge rate is 5.5% x 25% = 1.375% and the effective income tax rate amounts to 25% + 1.375% = 26.375% (not 25% + 5.5%). RENTAL INCOME Rental income is taxed at progressive rates. Owners can deduct any expenses from the gross receipts, which were incurred to produce, maintain and safeguard that income. Depreciation is generally set at 2% for existing houses, for newly built houses at 3% for the first eight years. (In the past some depreciation rates were higher). Investments done for maintenance of the property cannot be deducted in the year when they were done if they exceed 15% of the purchase price. They have to be added to the depreciable value of the property instead. CAPITAL GAINS If the property was held for more than ten years, gains incurred from the sales of property do not attract capital gains tax. Otherwise, capital gains realized by an individual from the sale of property within ten years after acquisition are taxed at the standard progressive income tax rates plus solidarity surcharges. Acquisition costs and improvement costs are deductible from the selling price when computing taxable capital gains. PROPERTY TAX Property Taxes (Grundsteuer) Real estate tax is levied on real estate in Germany. The tax base is the assessed value of the property. The basic tax rate is 0.35%, multiplied by a municipal factor. The effective tax rate is usually between 1.5% and 2.3%. The resulting base amount is further multiplied by municipal coefficients to calculate for the final tax due, which ranges from 280% to 810%. The multiplier is 460% for Frankfurt, and 175% for agriculture and forestry. Real estate tax is deductible for income tax purposes if the property is used in a trade or business. CORPORATE TAXATION INCOME TAX (Einkommenssteuer) Corporate tax is levied at 15%. In addition, a solidarity surcharge is levied at the rate of 5.5% of the corporation tax. The resulting combined rate is 15.8%. Germany - More data and information Guide to buying houses and registering property sales in Germany Where to by property in Germany Comments Be the first to comment on this article! Login or Register to submit a comment! In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours.