Berlin - Tax regulations
How much tax I have to pay on profit?
When you are buying a property in Berlin, the following tax regulations shall be taken into account.
Rental income from property is taxed in Germany at the personal income tax rate. For people registered in Germany, the income that exceeds the basic tax-free amount of 8,652 Euros (2016) for unmarried people and 17,304 Euros for married couples is taxed at an income tax rate between 15% and 42%. For non German citizen tax to be paid from the first Euro.
From the annual income of the purchased property, various items can be deducted:
- Financing costs. These mainly include the debt interest that you have to pay for the borrowed capital after purchasing a condominium, residential and commercial building in Berlin or following major renovation work.
- Renovation and maintenance costs
- Additional costs related to the use of your house and land. These mainly include the running costs such as heating, water supply, building insurance and the annual property tax.
The annual property tax varies from region to region. For a 50 sqm apartment in Berlin, for example, you have to pay approx. 180 euros per year. The property tax can be apportioned as monthly operating costs to the tenants of the Berlin apartment.
Depreciations can be applied for the building section (property excluding land). These are spread linearly over 40 years at a rate of 2.5% p.a. if the building is an old one (constructed before 31.12.1924). In more recently built buildings, the deprecations for wear and tear have to be accounted for linearly over 50 years at a rate of 2% p.a. In commercial properties, shorter depreciation periods can be applied with correspondingly higher depreciation rates.
For detailed tax advisory we can support you with different tax advisers available in your mother language within our network.