Ongoing ownership

Inside the WEG

For an Eigentumswohnung, the owner is automatically a member of the Wohnungseigentümergemeinschaft, the community of unit owners. The WEG meets at least annually (the Eigentümerversammlung), votes on the budget, on major repairs, on modernisation projects, and on house rules. Individual owners can be outvoted on items affecting their unit, within the limits of the WEG-Gesetz.

The financial expression of the WEG is the Hausgeld, a monthly contribution covering common-area maintenance, utilities for shared spaces, building insurance, and a reserve fund (Instandhaltungsrücklage) for future major works. Part of Hausgeld is umlagefähig, meaning it can be passed on to the tenant via the annual Nebenkostenabrechnung. The rest stays with the owner.

The tenant relationship

The Mietvertrag (lease) is governed primarily by the BGB and a body of tenant-protection legislation that is, on a European scale, unusually favourable to tenants. Kündigungsschutz limits the landlord's ability to terminate without specific grounds. Bestandsschutz means an existing lease binds the new owner if the property is sold. Mietpreisbremse, where it applies, caps the initial rent on a new lease at Mietspiegel plus ten percent.

Two structures govern how rent rises during a tenancy: Staffelmiete (pre-agreed step increases at fixed dates) and Indexmiete (rent indexed to the consumer price index). Without either, landlords can request Mietanhebung up to the local Mietspiegel, with statutory limits on frequency and percentage.

For modernisation work that improves the property's value or energy efficiency, Modernisierungsumlage allows up to eight percent of qualifying costs per year to be added to the rent, subject to a cap of €3 per square metre over six years, and notification rules that must be followed precisely.

The insurances worth lining up

Three insurances cover most of the ongoing risk profile:

Wohngebäudeversicherung, building insurance, mandatory for any property with a mortgage in practice, and usually held collectively by the WEG for a multi-unit building. Covers fire, water damage, storms.

Vermieterhaftpflicht, landlord liability insurance. Covers claims from third parties (often tenants) arising from the property's condition.

Mietausfallversicherung, rent-default insurance. Optional; cost-benefit depends on tenant profile and personal liquidity.

The annual tax loop

Each tax year, the rental income, all Werbungskosten (deductible expenses), and the AfA depreciation flow into the Anlage V of the personal Steuererklärung. Deductible items include mortgage interest, the non-umlagefähig portion of Hausgeld, repair and maintenance costs, AfA, travel to and from the property, and advisory fees.

The mechanical detail of this loop is covered in the tax advantage.

What comes next

Eventually every property is exited, sold, gifted, inherited, or held into the next generation. The exit has its own tax footprint and its own timing logic.