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🧾 Taxes on letting

Rental income is taxable. This page gives basic figures on income, deductible expenses and depreciation.

tax letting and leasing § 21 EStG depreciation (AfA) deductible expenses depreciation Anlage V

In brief

Rental income is income from letting and leasing. You deduct expenses connected with the letting (deductible expenses, Werbungskosten).

  • If you let cheaply, the deduction may be restricted: from 66 percent of the local rent, the letting counts as paid; at 50 to under 66 percent a total surplus forecast is needed; under 50 percent it is split.
  • You depreciate the building each year (AfA).

Step by step

  1. Record incomeNote all rents and service charge payments.
  2. Collect expensesCollect receipts for interest, repairs, management.
  3. Apply depreciationDetermine acquisition costs and year of completion.
  4. Consider tax adviceClarify individual questions with a tax adviser or an income tax assistance association (Lohnsteuerhilfe).

Deadlines

66 percent
From this rent level (measured against the local rent), long-term residential letting counts as paid§ 21 Abs. 2 EStG
2 percent / 3 percent
Annual building depreciation: 2 percent for completion from 1925 to 2022, 3 percent for completion after 2022; 2.5 percent for earlier completion§ 7 Abs. 4 EStG
5 percent
Declining-balance depreciation for new residential buildings where construction starts after 30 September 2023 and before 1 October 2029; also on purchase, if the binding contract is concluded in this window§ 7 Abs. 5a EStG
Watch out – common mistakes
  • Under 50 percent of the local rent the deduction is split (§ 21 Abs. 2 EStG). At 50 to under 66 percent a total surplus forecast is required according to the tax administration and case law. The reference figure according to the tax administration's view is the warm rent (not checked in full text).
  • Maintenance expenditure, acquisition-related construction costs and VAT were not researched here.
  • Tax details change; check the current text of the law.
In depth · legal basis, figures and practice – for advisers and professionals

Income, § 21 EStG

Income from letting and leasing is income from renting out immovable property. For long-term residential letting, the letting counts as paid if the rent is at least 66 percent of the local rent. If the rent is below 50 percent, it is split into a paid and an unpaid part. At 50 to under 66 percent a total surplus forecast is required according to the tax administration and case law. The reference figure according to the tax administration's view is the warm rent (not checked in full text).

Depreciation, § 7 EStG

For buildings, straight-line depreciation under § 7 Abs. 4 EStG is, depending on completion, 2 percent (1925 to 2022), 3 percent (after 2022) or 2.5 percent (before 1925). For new residential buildings where construction starts after 30 September 2023 and before 1 October 2029 (on purchase: binding contract in this window), declining-balance depreciation of 5 percent of the respective book value can be applied under § 7 Abs. 5a EStG.

Who is responsible
  • Finanzamt (tax office)
  • Tax adviser (Steuerberater)
  • Income tax assistance association (Lohnsteuerhilfeverein) (limited scope)
Further reading
Insurance for landlordsService charge statement

Quick questions

Worum geht es bei „Taxes on letting“?
Rental income is taxable. This page gives basic figures on income, deductible expenses and depreciation.
Which deadlines and figures matter?
  • 66 percent: From this rent level (measured against the local rent), long-term residential letting counts as paid (§ 21 Abs. 2 EStG)
  • 2 percent / 3 percent: Annual building depreciation: 2 percent for completion from 1925 to 2022, 3 percent for completion after 2022; 2.5 percent for earlier completion (§ 7 Abs. 4 EStG)
  • 5 percent: Declining-balance depreciation for new residential buildings where construction starts after 30 September 2023 and before 1 October 2029; also on purchase, if the binding contract is concluded in this window (§ 7 Abs. 5a EStG)
What should I do first?
  • Record income: Note all rents and service charge payments.
  • Collect expenses: Collect receipts for interest, repairs, management.
  • Apply depreciation: Determine acquisition costs and year of completion.
What do I need to watch out for?
  • Under 50 percent of the local rent the deduction is split (§ 21 Abs. 2 EStG). At 50 to under 66 percent a total surplus forecast is required according to the tax administration and case law. The reference figure according to the tax administration's view is the warm rent (not checked in full text).
  • Maintenance expenditure, acquisition-related construction costs and VAT were not researched here.
  • Tax details change; check the current text of the law.
Evidence
  • Bundesministerium der Justiz, Gesetze im Internet, § 21 EStG, retrieved 20 September 2026
  • Bundesministerium der Justiz, Gesetze im Internet, § 7 EStG, retrieved 20 September 2026
As of

September 2026 · Sources and method

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