All you need to know about buy to let investment in Germany!

Why buy to let investment is attractive in Germany?

In recent years, various factors have made investing in real estate in Germany even more attractive.

Stock market volatility and historically low-interest rates have made the buy to let investment an attractive method for investing in Germany.

Due to the increasing demand for a rental property in Germany, landlords can achieve a great source of income through rent.

In addition, Germany’s economic power and the development of businesses in the service sector, especially in metropolitan areas such as Berlin, Munich, and Frankfurt, have led to higher rents in city centers.

With the services of the Wise Business Group, you can get comprehensive information about changes in the price of commercial and residential real estate in Germany in recent years and also receive essential tips and advice for getting a mortgage in Germany.

Is it possible to get a mortgage to buy to let properties in Germany?

Yes, you can receive a mortgage to buy to let properties in Germany.

Such a loan helps landlords buy property in Germany and rent it out to others. In this case, they will be able to pay their mortgage installments on time with the help of rent received, without running into financial difficulties. Our team can help you in identifying and introducing the best mortgage options.

Is rental income taxable in Germany?

Yes. Under German law, as a property owner, you are required to pay rental income tax. Mortgage interest is not tax-deductible on owner-occupied properties in Germany.

However, you can deduct all relevant expenses from your taxable rental income if you choose the buy to let investment in Germany, or you are an owner and rent out your property to someone else. Expenses relating to rental income include the costs for mortgage, maintenance, improvements, or repairs.

The considered rate for rental income is the standard rate of progressive income tax for individuals and couples with a 5.5 percent solidarity cost.

Does the time of selling a property in Germany affect the owner’s tax burden?

Yes, depending on the time of selling your property in Germany, you may be required to pay taxes. Foreign owners in Germany who sell their property for ten years or less will be required to pay capital gains tax. The capital gains include the owner’s annual income in the same year that he sold his property.

For example, if you own a property in Germany and you want to sell it after nine years and make a profit, you will be taxed at the rate of 42%. But if you own the same property for at least ten years and then sell it, you will not be taxed.

Contact us for more information on tax specifications of buy to let investment in Germany. Our experts will guide you with the specialized knowledge and experience they have gained over the years.

Tips and tricks for buying a property and renting it out in Germany

For making a mortgage on a buy to let property in Germany a profitable investment, you need to rent out your property appropriately.

As a property owner in Germany, you are responsible for designing the rental agreement. In this regard, pay attention to the following:

• The minimum rental period can be very long.
• When designing a rental agreement, make sure that you mention all the relevant details.• When designing a rental agreement, make sure that you mention all the relevant details.
• In most cases, rents do not have a fixed term.

What are the rules for determining the rent of a property in Germany?

You should specify the amount of rent in the rental agreement. Apart from rental apartments, if you conclude a new rental contract, you are free to negotiate the rent and ask for a higher amount than the conventional relative rents.

However, the amount requested can be up to 20% higher than the average rent. After setting the rental agreement, you will face enforcing strict legal regulations in case of a rent increase. In such cases, you can ask for the amount of customary rent as the maximum.

For more information on determining the rent and arranging the rental agreement in Germany, you can also use the Wise Business Group consulting services.