Jointly Owned Rental Property in Germany: How to File an Additional Tax Declaration?
If you own a rental property in Germany together with another person, your tax obligations may be different from those of a sole owner.
Many property owners are surprised when, after filing their German income tax return, the tax office requests an additional declaration called the Declaration for the Separate and Uniform Determination of Tax Bases (Feststellungserklärung).
Although this is an additional tax return, it does not mean that your rental income is taxed twice. Its purpose is simply to determine the total rental income and expenses for the jointly owned property and allocate the correct share to each owner before their individual income tax is calculated.
At NeoTax, we regularly assist clients with this procedure and can prepare both the Feststellungserklärung and the individual German income tax returns.
Please note: Whether a Feststellungserklärung is required depends on the specific circumstances of your case and the requirements of the competent German tax office. If you own a German rental property together with another person, NeoTax will review your situation and advise whether this additional declaration is necessary.
1. Who usually needs this declaration?
A Feststellungserklärung is generally required whenever two or more persons jointly receive rental income from the same German property.
Typical examples include:
husband and wife owning a rental apartment together, registered partners, unmarried couples, brothers and sisters, parents and children, friends purchasing an investment property together, communities of heirs (Erbengemeinschaft), any other co-ownership arrangement.
If there is only one owner, this declaration is generally not required.
2. Why is an additional declaration necessary?
When several people own one rental property, German tax law requires the tax office to determine the rental income once for the property before allocating it to each owner.
Instead of calculating the income separately for every owner, the tax office first determines:
- the total rental income,
- the total deductible expenses,
- the taxable rental result,
- the ownership shares,
- the amount attributable to each owner.
Only after this process has been completed can the individual income tax of each owner be calculated correctly.
3. How does the procedure work?
The taxation normally consists of two separate steps:
One declaration is submitted for the jointly owned property.
The declaration contains:
- rental income,
- deductible expenses,
- ownership percentages,
- information about every owner,
- the authorised representative (Empfangsbevollmächtigter) who receives correspondence from the tax office on behalf of all owners.
For jointly owned rental property, the tax office generally requires the following forms:
- ESt 1 B - Main declaration,
- Anlage FB - Details of each owner,
- Anlage FE 1 - Allocation of income between the owners,
- Anlage V - Rental income and deductible expenses.
After reviewing the declaration, the tax office issues a Feststellungsbescheid (assessment notice).
The assessment confirms:
- the total rental income,
- the deductible expenses,
- the taxable rental result,
- the amount allocated to each owner.
This allocation becomes legally binding for the subsequent individual tax assessments.
Once the allocation has been confirmed, each owner files (or the tax office amends) their own German income tax return using the amount assigned in the Feststellungsbescheid.
The tax office then calculates each owner’s personal income tax based on their allocated share and their individual tax situation.
4. Why can the tax office change an income tax assessment that was already issued?
This is one of the most common questions we receive. Sometimes the tax office processes the individual income tax return before the Feststellungserklärung has been submitted. Later, the tax office realises that the property has multiple owners and requests the additional declaration.
Once the Feststellungsbescheid has been issued, the tax office is legally required to use the figures determined in that assessment.
If these figures differ from those used in the original individual tax return, the tax office automatically issues an amended income tax assessment.
Depending on the final allocation, this may result in:
- additional tax,
- an additional refund,
- or no change.
This does not mean that the rental income has been taxed twice. The individual tax assessment is simply corrected using the legally binding allocation determined in the Feststellungsbescheid.
5. How many tax returns are required?
This is another common misunderstanding. For jointly owned rental property, the Feststellungserklärung does not replace the personal income tax return.
6. Filing deadline
The Feststellungserklärung generally follows the same filing deadline as the German income tax return.
Without professional representation, the declaration is generally due by 31 July of the following year.
If you are represented by a tax adviser or another authorised tax representative, extended deadlines usually apply according to the applicable rules for the relevant tax year.
7. Documents normally required
To prepare the declaration, we usually require:
- rental agreement(s),
- annual rental income summary,
- annual operating cost statements,
- property tax notices,
- utility statements,
- maintenance invoices,
- insurance invoices (if applicable),
- ownership information (ownership percentages),
- previous German tax assessments (if available).
Additional documents may be required depending on the individual circumstances of your case.
8. Legal basis
The obligation to file a Feststellungserklärung is primarily based on the following German legislation:
German Fiscal Code (Abgabenordnung – AO):
- § 39 ods. 2 č. 2 AO - Allocation of jointly owned assets for tax purposes.
- § 149 AO - Filing obligations and deadlines.
- § 179 AO - Separate determination of tax bases.
- § 180 AO - Separate and uniform determination of tax bases.
- § 181 AO - Procedure for the determination of tax bases.
- § 182 AO - Binding effect of assessment notices.
German Civil Code (Bürgerliches Gesetzbuch – BGB):
- § 741 - 758 BGB – Co-ownership (Bruchteilsgemeinschaft).
- § 2032 a nasl. BGB - Community of heirs (Erbengemeinschaft).
Need help filing your property tax return? Let our tax experts handle your taxes. Do not hesitate to contact us if necessary.
