How to Calculate Tax on Rental Income in Germany: A Simple Guide
If you own and rent out a property in Germany, the income you receive is subject to tax. Navigating the rules around deductions and calculations can seem complicated, but our rental income tax calculator is there to help you out.Updated on 11 September 2025
This article and our calculator aim to give you clear insights into your tax obligations as a landlord. We'll walk you through how the calculation works, what expenses you can deduct to lower your tax bill, and provide a clear example.
Let's Calculate Your Estimated Rental Income Tax
Some important notes to consider:
Calculator inputs | Note |
|---|---|
Other tax-deductible costs | You can deduct quite a few items under other deductible costs:the annual property tax (Grundsteuer), property management fees (Hausverwaltung), costs for advertising for a new tenant, travel expenses to the property (Fahrtkosten zur Immobilie), building insurance, (Wohngebäudeversicherung) and fees for accountants or tax advisors. |
Rental income | Rental income is taxed based on a cash basis principle, so use the year in which income was received or expenses were paid. |
Depreciation | You can also depreciate the purchase fees for the property, but only for the built-up value! Depreciation is straightforward if linear (the standard 2-3%). You can simply use last year’s depreciation number or calculate it as a percent of the purchase price minus land value plus the purchase fees. For new-built energy-efficient buildings, the depreciation is much higher but also more complex to calculate: in case you don’t know, here you find a description of the rules, and you can calculate the depreciation values for a new investment. |
Your Estimated Rental Tax Results:
You have an estimated taxable rental income of 16.000 €. With a marginal tax rate of 42 %, your rental tax paid will be 6.720 €.
The figure below provides you with an idea of your marginal tax rate. See here for more explanations on the complex German income tax rates.
Your Results Explained
Taxable Rental Income: This is the amount that will be added to your regular income for tax purposes. Note: it can also be negative, especially if you have a high depreciation. In that case you get money back from the tax office!
Marginal Tax Rate: In Germany's progressive tax system, your income is taxed the higher your income is. The marginal rate is the tax rate you pay on your last euro of income. Your taxable rental income is effectively taxed, or returned to you, at about the highest rate you pay
Estimated Rental Tax Paid: This is the estimated amount of additional income tax you pay or get back because of your rental activities.
How To Calculate Tax on Rental Income in Germany?
The calculation is actually quite logical and follows a simple formula. First, you determine your rental profit, which is known as taxable Rental Income.
The Formula:
Total Rental Income - All Deductible Expenses = Taxable Rental Income
This taxable income is then added to your other income (like your salary). The total is then used to calculate your income tax based on the 2025 tax brackets.
What are Deductible Expenses (Werbungskosten)?
The most important step in reducing your rental tax is knowing which expenses (Werbungskosten) you can deduct. These are any costs you incur to acquire, secure, and maintain your rental property. Our Hypofriend tax on rental income calculator groups them into the following categories:
Interest on Loans: If you have a mortgage on your rental property, you can deduct the full amount of the interest you pay each year. You cannot deduct the principal repayment portion of your loan (Tilgung).
Repair and Maintenance Costs: This covers everything you spend to keep the property in good shape. This can include costs for a new boiler, painting the walls, fixing a leaky faucet, or servicing the heating system.
Depreciation (Abschreibung für Abnutzung - AfA): This is a powerful, non-cash deduction that represents the building's wear and tear over time. For residential buildings constructed after 1924, you can typically deduct 2% of the building's purchase price each year. This is a crucial deduction that many new landlords overlook. Our in-depth article about deprecation rules in Germany explains the nitty-gritty about this topic.
Other Tax-Deductible Costs: This category covers all other operational expenses. The most common are:
Property Tax (Grundsteuer) is paid to your local municipality.
Property management fees (Hausverwaltung).
Costs for advertising for a new tenant.
Fees for accountants or tax advisors.
Example Calculation
Let’s walk through an example to see how it all comes together.
Meet Anna. She is a single filer with a regular job.
Annual Gross Income (Salary): 65.000 €
Filing Status: Single
Anna also rents out an apartment.
Total Rental Income: 7.200 € per year (600 €/month).
Mortgage Interest: 3.000 € per year.
Maintenance Costs: 800 € this year for a plumbing repair.
Depreciation (AfA): 4.000 € (2 % of the building's 200.000 € value).
Other Costs: 600 € for property tax and management fees.
Step 1: Calculate Anna's Taxable Rental Income
7.200 € (Cold Rent) - 3.000 € (Interest) - 800 € (Maintenance) - 4.000 € (AfA) - 600 € (Other) = -1.200 €
Anna's taxable income from her rental property is -1.200 €. Since it is negative, it will reduce her total taxable income.
Step 2: Calculate Anna's Total Taxable Income
65.000 € (Salary) - 1.200 € (Rental Loss) = 63.800 €
Anna's total taxable income for the year is 63.800 €.
Step 3: Estimate the Rental Tax Paid
To find the tax specifically on her rental income, the calculator compares two scenarios:
Tax on her salary only (65.000 €): Based on 2025 single filer tax brackets and the solidarity surcharge, the tax would be approximately 24.700 €.
Tax on her total income (63.800 €): The tax on her combined income would be approximately 24.244 €.
The difference between these two amounts is the tax attributable to her rental income:
24.244 € - 24.700 € = -456 €
Anna will receive 456 € from the tax office.
Finally, your records:
Keep Your Records Fully but Efficiently: For example, take pictures of all invoices, receipts, and the relevant bank statements and put them in a folder.
You Want to Optimize Your Real Estate Investments?
Understanding how to calculate tax on rental income is the first step. If you're looking for help with financing your next property, book a free consultation with one of our experts today.