Own Home vs Investment Property Calculator

German tax law treats a rental property as an income-generating activity. Mortgage interest, depreciation (AfA), maintenance costs, management fees, and operating costs are all deductible expenses — and if total costs exceed rental income, the resulting net loss can reduce your taxable salary. An owner-occupied home is considered personal consumption, so none of these deductions apply, regardless of how large the mortgage is.

AfA (Absetzung für Abnutzung) is a tax deduction for the gradual wear and tear of a building. For new-build investment properties completed after 2022, you can claim 5% degressive depreciation annually on the building value — land is excluded. This creates a large deductible expense in the early years that typically produces a tax loss even if the property is cash-flow neutral. For older properties (before 2023), the applicable rate is 2–3% linear.

No. Germany does not allow mortgage interest deductions on owner-occupied homes. Once you rent the property to tenants, the same interest becomes a fully deductible expense against rental income. This structural difference is one of the key reasons many investors in Germany explore renting where they live and purchasing a separate investment property instead.

Rather than buying a home to live in, you continue renting your apartment and use your capital to buy a property that you let out to a tenant. The tenant's rent reduces your out-of-pocket mortgage costs, you benefit from AfA depreciation and interest deductions, and you retain flexibility to live where suits you. This calculator compares the year-one economics of both strategies side by side.

This calculator shows a simplified year-one snapshot — useful for understanding the structural tax difference between the two strategies. Over 10–15 years, mortgage interest decreases as the balance falls, depreciation rates change, and rents typically grow, all of which shift the relative economics over time.