What expenses can landlords deduct from rental income in Germany?

German landlords can deduct a wide range of expenses from rental income (Einkünfte aus Vermietung und Verpachtung) to reduce their taxable profit. The key categories of deductible expenses are set out in §9 EStG and applied in Anlage V of the Steuererklärung.

Deductible costs include: mortgage interest (Schuldzinsen) on loans used to purchase or improve the property, property management fees (Hausverwaltungskosten), maintenance and repair costs (Reparaturen und Instandhaltung), insurance premiums (Gebäudeversicherung), Grundsteuer (property tax), advertising costs for finding tenants, legal and accountancy fees related to the rental, and travel costs incurred visiting the property. Depreciation (Absetzung für Abnutzung, AfA) on the building structure is also deductible at 2% per year of the building's purchase cost (excluding land value). For new builds completed from 2023 onwards, an accelerated depreciation rate of 5% per year is available for a limited period to incentivise construction.

Larger renovation costs (Herstellungskosten) that increase the value or standard of the property beyond its original state must be capitalised and depreciated rather than expensed immediately. Costs of routine maintenance within three years of purchase exceeding 15% of the building purchase price (anschaffungsnahe Herstellungskosten) are similarly treated as capital expenditure. Detailed records and invoices for all deductible expenses should be retained for at least 10 years.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.