Tax resident

For tax residents in Germany it is important to understand what exactly you can put against your rental income as an expense or in other words: how you can reduce your total income to pay less tax.

So called “Werbungskosten” are costs investors have to spent in order to secure the rental income. The following costs are deductible from your rental income:

• Interest payment
• Depreciation ( normally 2% per year for property )
• Repairs
• Insurances
• Maintenance costs ( i.e. Management company)

Land transfer tax

Besides the above everyone, regardless of the tax residence, purchasers have to pay land transfer tax of 3.5% before registration of the property in their name.

Notary costs

Furthermore, the notary also needs to be paid by the purchaser which is about 1.5% of the purchase price.

Commission

Danziger & Weibezahl charges the buyer the commission rate of 4-6% depending on the specific property. In some instances the developers are paying for the commission and the service is to buyers free of charge.

In total an investor should calculate with an additional 10% of costs beside the purchase price.

Financing costs

When financing part of the investment, banks charge about 1-2% of the loan amount as an administrative fee.

Ongoing taxes

Every year property owners have to pay land tax (“Grundsteuer”) to the local authorities. The land tax differs from city to city but owners of property can safely calculate with 1% as a payable tax.

Useful links

• If you are looking to purchase Berlin property as an investment enter here to view our portfolio.
• Read about our Berlin investment property services here
• Discover the top ten reasons for purchasing Berlin property

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