Letting it out Germany

What would a flat actually yield, after the bank and the tax office?

A yield percentage says nothing about whether a flat pays for itself. This works out the cash it actually throws off each month – including the tax, which on a financed letting is usually money coming back rather than going out.

The flat, the loan and the rent

The purchase costs are seeded from the state you pick and stay editable. Everything below the loan is what turns a price into a yield.

Purchase price€What the seller is asking. Example: the purchase costs on top run from 9 to 15 percent depending on the state and whether there is an agent. Federal stateSets the land transfer tax and the usual agent share, which both raise the base your yield is measured against. Example: Bavaria charges 3.5 percent, Brandenburg 6.5. Equity€Cash you put in, covering the purchase costs first. Example: less equity means a bigger loan, more interest to deduct, and worse cashflow. Interest rate%The nominal rate your bank fixes in the contract, per year. Example: on a letting the interest is fully deductible, so the tax office pays back part of every rise. Initial repayment rate%How much of the loan you pay back in the first year, as a share of it. Example: repayment is not a cost – it buys you the flat – but it does leave your account every month. Monthly cold rent€Kaltmiete, without the service charges you pass through to the tenant. Example: €1,676 a month is what this flat would need to break even on cash.

Financing and purchase costs

Fixed-rate periodyears Refinancing rate after the fixed period%Required before the page will endorse a return that extends beyond the fixed-rate period. Land transfer tax%Set by the state. Example: it is part of the purchase price for depreciation, so it is not entirely lost. Estate agent%Your half of the commission. Example: zero for a private sale.

Running the letting

Rent increases per year%What the rent does over time, within what the Mietspiegel allows. Example: 1.5 percent is a cautious assumption for an existing tenancy. Vacancy and rent loss%The share of a year the flat earns nothing, plus what a tenant fails to pay. Example: 3 percent is roughly eleven empty days a year. Management not passed on€The part of the Hausgeld the tenant cannot be charged, plus any letting agent. Example: for a flat in a block this is usually 40 to 80 a month. Maintenance reserve cash contribution%Set aside each year as a share of the purchase price. A WEG reserve transfer is cash out, but is not deductible until the WEG actually spends it. Deductible maintenance actually spent€Annual invoices paid on deductible repairs; do not enter a mere transfer into the WEG reserve again here.

Depreciation and income tax

Land share of the price%Land is not depreciated, only the building is. Example: this single number moves your depreciation more than anything else on the form – for a flat it is often 15 to 25 percent, and much more in a prime location. Year the building was finishedDecides the depreciation rate: 2 percent from 1925, 2.5 percent before that, 3 percent for a new build. Example: this page uses 2 % a year for yours. Acquisition monthBuilding depreciation is prorated by full months in the acquisition year. Your marginal tax rate%Rental profit is taxed at your personal rate, and a loss is deducted at it. Example: the higher your rate, the more a loss-making letting is worth to you.

Selling at the end of the horizon

Property appreciation%Only affects the equity figure, never the cashflow. Example: leave it at zero to see what the flat earns on rent alone. Years to modelExample: ten years is the speculation period – sell after it and the gain is tax free. Sale costs at the horizon%Broker and transaction friction deducted from the sale proceeds. Private sale tax scenarioChoose taxable for a private sale inside the ten-year period unless a statutory owner-occupation exception applies. Sale gain tax rate%Optional; when blank, the marginal income-tax rate above is used.

Every month, after the loan, the costs and the tax

-€352 -€457 before tax · the tax office moves it by €105

Gross yield4.2 %a year of rent over the price alone – the number in every listing

Net yield2.64 %after costs and over what you really paid, €336,210

Depreciation€5,7162 % of the €285,778 building share, every year

Taxable result, first year-€2,992a potential loss offset, subject to sufficient taxable income and an accepted profit-making intent

Cash turns positivenot within 20 yearsrent growth against a payment that does not move

Return on your equityNot availablerequires financing assumptions through the horizon

Sale proceeds after debt, costs and tax€297,618sale costs €0 · sale tax €0

What the flat costs you, or pays you, each month

Rent and costs rise while interest and principal change under the entered financing scenario.

Year by year
Year	Rent	Interest	Reserve cash	Deductible repairs	Depreciation	Taxable	Tax	Cashflow	Equity
1	€12,222	€9,138	€3,000	€0	€5,716	-€2,992	-€1,257	-€4,229	€53,500
2	€12,405	€8,947	€3,045	€0	€5,716	-€2,623	-€1,102	-€4,251	€63,467
3	€12,591	€8,750	€3,091	€0	€5,716	-€2,245	-€943	-€4,275	€73,701
4	€12,780	€8,545	€3,137	€0	€5,716	-€1,857	-€780	-€4,301	€84,210
5	€12,972	€8,333	€3,184	€0	€5,716	-€1,458	-€612	-€4,329	€95,001
6	€13,167	€8,112	€3,232	€0	€5,716	-€1,049	-€441	-€4,360	€106,084
7	€13,364	€7,884	€3,280	€0	€5,716	-€629	-€264	-€4,393	€117,468
8	€13,565	€7,648	€3,330	€0	€5,716	-€198	-€83	-€4,429	€129,163
9	€13,768	€7,402	€3,379	€0	€5,716	€244	€103	-€4,467	€141,177
10	€13,975	€7,148	€3,430	€0	€5,716	€699	€294	-€4,509	€153,522
11	€14,184	€6,885	€3,482	€0	€5,716	€1,166	€490	-€4,553	€166,207
12	€14,397	€6,612	€3,534	€0	€5,716	€1,646	€691	-€4,600	€179,244
13	€14,613	€6,328	€3,587	€0	€5,716	€2,138	€898	-€4,650	€192,644
14	€14,832	€6,035	€3,641	€0	€5,716	€2,645	€1,111	-€4,704	€206,418
15	€15,055	€5,731	€3,695	€0	€5,716	€3,165	€1,329	-€4,761	€220,578
16	€15,280	€5,415	€3,751	€0	€5,716	€3,699	€1,554	-€4,822	€235,136
17	€15,510	€5,088	€3,807	€0	€5,716	€4,249	€1,784	-€4,887	€250,106
18	€15,742	€4,749	€3,864	€0	€5,716	€4,813	€2,022	-€4,955	€265,501
19	€15,978	€4,398	€3,922	€0	€5,716	€5,394	€2,265	-€5,028	€281,333
20	€16,218	€4,034	€3,981	€0	€5,716	€5,991	€2,516	-€5,104	€297,618

Service charges passed through to the tenant cancel and are omitted. The depreciation basis includes allocated acquisition costs; the first year is prorated by acquisition month. Not modelled: special new-build depreciation, financing fees, loss carry-forwards, or the tax office's binding building/land allocation.

Work the loan itself out in the mortgage calculator

Why the listing number lies

Gross yield ignores the two things that decide it

It divides a year of rent by the asking price. The price you actually pay is a tenth higher once the state, the notary and the agent are counted, and the rent you actually keep is smaller once vacancy, management and the reserve come out. Net yield uses both, which is why it is so much lower.

The part people miss

A tax loss is only a potential benefit

Interest, actually incurred repairs and depreciation can be deductible while principal and a mere reserve transfer are not. The displayed negative tax is a potential offset: usable income, loss rules and a credible profit-making intent still matter.

The single biggest input

The land share decides your depreciation

Only the building is depreciated. Move the land share from 15 to 35 percent and nearly a quarter of your yearly deduction disappears, which changes the tax result more than a whole point of interest would. The tax office has its own view of this figure, taken from the local land values.