How is rental income taxed in Germany?

Do you own property in Germany? What tax obligations do you have as a result of this ownership?

Who is obliged to file a property tax return in Germany?

Every property owner who rents out a property in Germany for profit or income is required to file a German property tax return. The basis for filing the tax return is therefore the income derived from the rental of the property. In the case of multiple rental properties, the owner of the property must file a tax return to determine the value of the property tax for each property, that is, fill out appendix "V" separately for each property on the tax return. Rental income must be taxed for the year in which it is actually received, regardless of the period for which the rental payment is determined.

Who is not obliged to file a property tax return in Germany?

Rental income that is less than €520 per year is exempt from income tax. It is therefore not necessary to report it on the tax return. The same applies for temporary renting or temporary letting of part of your own rented flat.

What documents will I need for my property tax return?

• lease agreement,
• a purchase contract or a construction cost statement,
• determination of depreciation,
• brokerage account,
• loan agreement.

If you are renting out the property for the first time, it is important to fill in the general details of the property in the tax return, such as the location of the property, the file number, the owner, the type of property and the date of purchase or the date of construction.

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How do I report rental income from the property on my tax return?

Rental income from rental property is reported in the appendix V of the tax return, where it is important to fill in rental income, incidental and operating expenses, advertising expenses and depreciation.

What can I deduct from my tax return?

The most common deductible expenses related to rental property include:

• property tax,
• loan costs,
• accounting costs,
• property repair and renovation costs,
• travel costs,
• insurance premiums.

The National Treasury adds up all the income arising from the rental of the property for the year. From this amount, the tax office then deducts the property-related expenses incurred by the owner or landlord of the property in the same year. These expenses therefore reduce the amount from which you subsequently pay tax or which is taxable income.

How can I file my property tax return?

There are two ways to file or send a tax return to the tax office:

• electronically - electronic or online filing can be submitted via the online tax portal 'Elster',
• on paper.

Deadline for filing the property tax return

• In most years, tax payers without a Steuerberater (tax advisor) have until the end of July to file. But for the coming years, that deadline (Abgabefrist) has been pushed back at least a month.

  • Tax returns prepared by non-tax advised taxpayers: Declaration for the calendar year 2022, deadline for submission by 2nd October 2023
  • Tax returns prepared by tax advisors, income tax assistance associations or other persons authorized to provide advice: Declaration for the calendar year 2022, deadline for submission: 31 July 2024. Source: https://finanzamt-bw.fv-bwl.de/,Len/9361697

    
    

• If the tax return is filed voluntarily, the deadline is extended up to 4 years. For the 2022 tax year, the tax return can be filed until 31 December 2026.

Based on the data in the tax return, the tax office will calculate the property tax value and issue a property tax payment order.

Please note: Do not forget to pay your annual property tax, which is due quarterly on 15 January, 15 May, 15 August and 15 November. The amount of property tax is determined by the municipality in which the property is located. The landlord may claim the full amount of the property tax on his tax return as an income-related expense.

Need help filing your tax return? Let our tax experts handle your taxes. Do not hesitate to contact us if necessary.