Real estate glossary
The terms that matter, in plain English
Every German real estate term you'll meet as an international investor, from tax benefits to financing, defined clearly and linked to the masterclass lessons that use them.
46 terms · plain-English definitions
Popular terms
Tax
AfAAbsetzung für Abnutzung
AfA (Absetzung für Abnutzung) is the German term for depreciation on investment properties. It allows you to deduct 2% of the building value from your taxable income each year for 50 years.
Tax
Sonder-AfASonder Absetzung für Abnutzung
Sonder-AfA is an enhanced depreciation benefit for newly built properties. It allows you to deduct 5% annually for the first 4 years, in addition to the standard 2% AfA.
Financial
Cashflow
Cashflow is the net amount of money flowing in and out of your property investment. Positive cashflow means rental income exceeds all expenses; negative cashflow means you pay out of pocket monthly.
Financial
AppreciationWertsteigerung
Appreciation is the increase in property value over time due to market forces, inflation, and improvements. In Germany, real estate has historically appreciated at 3-4% annually.
Financial
ROIReturn on Investment
ROI (Return on Investment) measures how much profit you make relative to your initial investment. In real estate, it accounts for rental income, tax savings, and appreciation.
Tax
SpekulationsfristSpeculation period
The Spekulationsfrist is the holding period after which a privately owned investment property can be sold free of capital gains tax. For a rental property it is ten years, measured from the notarial signing date of the original purchase.
Tax
Denkmal-AfAHeritage depreciation
Denkmal-AfA is the accelerated depreciation available on the qualifying renovation costs of a listed (Denkmalschutz) building: up to 9% per year for years 1 to 8, then 7% for years 9 to 12, on top of the regular AfA on the original building substance.
Tax
AfAAbsetzung für Abnutzung
AfA (Absetzung für Abnutzung) is the German term for depreciation on investment properties. It allows you to deduct 2% of the building value from your taxable income each year for 50 years.
Financial
AppreciationWertsteigerung
Appreciation is the increase in property value over time due to market forces, inflation, and improvements. In Germany, real estate has historically appreciated at 3-4% annually.
Financial
AnnuitätendarlehenAnnuity loan
An Annuitätendarlehen is the dominant German mortgage type. The monthly payment stays flat throughout the Zinsbindung, while inside it the interest portion shrinks and the principal (Tilgung) portion grows as the balance falls.
Tax
Building ValueGebäudewert
Building value (Gebäudewert) is the portion of the property purchase price allocated to the structure itself, excluding land. Only the building value can be depreciated with AfA.
Financial
BeleihungsauslaufLoan-to-value ratio
Beleihungsauslauf is the loan amount as a percentage of the bank-determined property value (Beleihungswert). German banks tier interest rates around break points near 60%, 80%, and 90%, so contributing more equity can drop you into a cheaper tier.
Financial
Cashflow
Cashflow is the net amount of money flowing in and out of your property investment. Positive cashflow means rental income exceeds all expenses; negative cashflow means you pay out of pocket monthly.
Tax
Capital Gains TaxSpekulationssteuer
In Germany, profits from selling investment property are tax-free after 10 years of ownership (Spekulationsfrist). Before 10 years, gains are taxed at your personal income tax rate (14–45% plus solidarity surcharge) under §23 EStG—not the flat Abgeltungsteuer rate.
Property
CondominiumEigentumswohnung
An Eigentumswohnung is individually owned apartment unit within a larger building. Owners share common areas and pay monthly fees (Hausgeld) for building maintenance.
Legal
Closing CostsNebenkosten / Kaufnebenkosten
Closing costs (Kaufnebenkosten) include property transfer tax, notary fees, and land registry fees. In Germany, expect 10-15% of purchase price in total closing costs.
Tax
Deductible ExpensesWerbungskosten
Werbungskosten are expenses related to earning rental income that you can deduct from your taxable income. This includes mortgage interest, repairs, property management fees, insurance, and more.
Financial
Down PaymentEigenkapital
Eigenkapital (equity/down payment) is the cash you put down when purchasing property. German banks typically require 10-30% of purchase price plus closing costs (another 10-15%).
Tax
Denkmal-AfAHeritage depreciation
Denkmal-AfA is the accelerated depreciation available on the qualifying renovation costs of a listed (Denkmalschutz) building: up to 9% per year for years 1 to 8, then 7% for years 9 to 12, on top of the regular AfA on the original building substance.
Strategy
Exit StrategyAusstiegsstrategie
An exit strategy is your plan for eventually selling the property. Key considerations include the 10-year capital gains tax exemption, market timing, and mortgage payoff.
Property
Existing PropertyBestandsimmobilie
Bestandsimmobilie refers to existing, previously owned properties. They typically have lower purchase prices than new construction but may require more maintenance and don't qualify for Sonder-AfA.
Tax
Income TaxEinkommensteuer
Income tax (Einkommensteuer) in Germany is progressive, ranging from 14% to 45%. Rental income is added to your taxable income, but property expenses reduce it, potentially lowering your overall tax burden.
Financial
Interest RateZinssatz
The interest rate (Zinssatz) is the annual percentage charged on your mortgage. In Germany, rates are typically fixed for 10-20 years. As of 2024, rates range from 3.5-5%.
Tax
Land ValueBodenwert
Land value (Bodenwert) is the portion of your purchase price allocated to the land itself. Unlike buildings, land cannot be depreciated with AfA since it doesn't "wear out."
Strategy
LeverageHebelwirkung
Leverage (Hebelwirkung) means using borrowed money to increase investment returns. With 80% financing, you control a €500k property with just €100k down, amplifying both gains and risks.
Financial
Market ValueMarktwert
Market value is the estimated price a property would sell for in the current market. It fluctuates based on location, condition, interest rates, and economic factors.
Tax
Marginal Tax RateGrenzsteuersatz
Your marginal tax rate is the percentage of tax you pay on your next euro of income. In Germany, it ranges from 14% to 45%. This rate determines your tax savings from property deductions.
Property
Multi-Family HomeMehrfamilienhaus
A Mehrfamilienhaus is a building with multiple separate residential units. Investors can diversify risk across tenants and often achieve better yields than single-family homes.
Financial
MortgageHypothek / Immobiliendarlehen
A mortgage (Hypothek or Immobiliendarlehen) is a loan secured by property. In Germany, typical terms include 10-30 year fixed interest rates and 1-3% annual repayment rates.
Financial
Mortgage InterestHypothekenzinsen
Mortgage interest (Hypothekenzinsen) is the interest portion of your mortgage payment. For investment properties, it's fully tax-deductible as a rental expense.
Legal
MietpreisbremseRent brake
The Mietpreisbremse caps the initial rent on a new lease in designated tight-housing zones at the local Mietspiegel plus ten percent. It limits how much rent a landlord can charge a new tenant and is currently extended into 2029.
Property
New ConstructionNeubau
New construction (Neubau) refers to properties built recently. They qualify for Sonder-AfA tax benefits and typically have lower maintenance costs but higher purchase prices.
Legal
Notary FeesNotarkosten
Notarkosten are mandatory fees paid to a notary (Notar) for authenticating property purchases in Germany. Typically 1.5-2% of purchase price, covering contract preparation and land registry updates.
Financial
Net Rental YieldNetto-Mietrendite
Net rental yield is annual rental income minus all expenses, divided by property value. It gives a realistic picture of cash return. Typical German yields: 2-5% net.
Legal
NotarNotary
A Notar is a neutral, state-appointed official who is mandatory for every German property transfer. The Notar drafts and reads the purchase contract, handles the Grundbuch entry, and ensures both parties understand what they sign, but does not advise or negotiate for either side.
Tax
Property Transfer TaxGrunderwerbsteuer
Grunderwerbsteuer is a one-time tax paid when purchasing property in Germany. The rate varies by state (Bundesland) from 3.5% to 6.5% of the purchase price.
Tax
Property TaxGrundsteuer
Grundsteuer is an annual property tax paid to local municipalities. It's typically 0.3-1% of assessed value and is fully tax-deductible as a rental expense.
Financial
Purchase PriceKaufpreis
The purchase price (Kaufpreis) is the agreed price for the property. This amount is split between building value (depreciable) and land value (not depreciable) for tax purposes.
Legal
Property ManagementHausverwaltung
Property management (Hausverwaltung) companies handle tenant relations, rent collection, maintenance, and legal compliance. Fees typically 8-15% of rental income.
Financial
ROIReturn on Investment
ROI (Return on Investment) measures how much profit you make relative to your initial investment. In real estate, it accounts for rental income, tax savings, and appreciation.
Financial
Rental YieldMietrendite
Rental yield measures annual rental income as a percentage of property value. Gross yield uses total rent; net yield subtracts operating expenses and taxes.
Tax
Sonder-AfASonder Absetzung für Abnutzung
Sonder-AfA is an enhanced depreciation benefit for newly built properties. It allows you to deduct 5% annually for the first 4 years, in addition to the standard 2% AfA.
Tax
SpekulationsfristSpeculation period
The Spekulationsfrist is the holding period after which a privately owned investment property can be sold free of capital gains tax. For a rental property it is ten years, measured from the notarial signing date of the original purchase.
Tax
Tax SavingsSteuerersparnis
Tax savings from real estate come from deducting property expenses (interest, depreciation, costs) from your taxable income, reducing the amount of income tax you pay.
Financial
TilgungAmortisation / principal repayment
Tilgung is the principal repayment portion of a German mortgage, usually expressed as the percentage of the original loan repaid in year one. A higher Tilgung shrinks the balance faster at the cost of a higher monthly payment.
Legal
WEGWohnungseigentümergemeinschaft
A WEG (Wohnungseigentümergemeinschaft) is the community of owners in a building divided into condos. It votes annually on the budget, repairs, and modernisation, and individual owners can be outvoted on shared matters within the limits of the WEG-Gesetz.
Tax
WegzugsbesteuerungExit taxation
Wegzugsbesteuerung (§6 AStG) is an exit tax on substantial company shareholdings when you give up German tax residency. It does not apply to directly held real estate, but leaving Germany still keeps the Spekulationsfrist running and Germany’s right to tax the property.