Property Investment Simulator

When you buy a rental property in Germany, you benefit from three potential sources of return: rental income from tenants, appreciation in the property's value over time, and significant tax advantages. Rental costs — mortgage interest, depreciation, management, maintenance — are deductible against rental income and, when they create a net loss, against your salary income too. This is why properties that generate a monthly cash shortfall in the early years can still produce a strong overall return.

The Spekulationsfrist is a German tax provision: if you hold an investment property for more than 10 years, any capital gain on sale is completely exempt from income tax. If you sell before 10 years, the gain is taxed at your personal marginal rate under §22 EStG — not the flat 26.375% Abgeltungsteuer. For a property that has appreciated by €200,000, the difference between selling at year 9 versus year 11 can mean a tax bill of €70,000+ versus zero.

AfA (Absetzung für Abnutzung) allows you to deduct the notional wear and tear of a building from your taxable income. The 5% degressive rate applies to new-build properties completed after 2022 and is calculated on the building value — land value is excluded. Because it is degressive, the absolute deduction shrinks slightly each year as the book value reduces. For a building valued at €500,000, year-one AfA is €25,000 — a significant deduction that in many cases creates a tax loss in the early years.

Most investment properties in Germany are financed with an Annuitätendarlehen — a fixed-rate mortgage where the monthly payment stays constant but gradually shifts from mostly interest to mostly principal repayment. Fixed-rate periods of 10 or 15 years are common. Banks generally require 10–20% equity plus closing costs. Expats without permanent residency or a lengthy German banking history may face stricter equity requirements or a more limited choice of lenders.

The key deductions are: (1) Depreciation — 5% degressive AfA on new-build building value, or 2–3% linear on older properties; (2) Mortgage interest — fully deductible against rental income each year; (3) Operating costs — management, insurance, maintenance, and reserves; (4) Acquisition costs — notary and land registry fees in year one. Combined, these typically produce a net rental loss in the early years that reduces your salary tax bill directly.

The simulator uses official German tax formulas (§32a EStG Progressionszonen) for 2026 and standard amortisation logic for the loan schedule. It provides a realistic estimate based on the inputs and assumptions shown in the methodology section. Real outcomes depend on property-specific factors: actual rent levels, vacancy, maintenance, tax law changes, and the refinancing rate when the Zinsbindung expires. Treat it as an educational starting point, not a financial guarantee.

Monthly cashflow is what you actually pay or receive each month — rental income, minus loan repayment, minus operating costs, plus tax savings. Negative cashflow means you top up the difference from your salary; positive cashflow means the property covers itself. Total return captures the complete picture: all cumulative cashflow over the holding period, plus the net proceeds from the eventual sale after repaying the outstanding loan and covering selling costs.