How property investment reduces your German income tax
Most high earners in Germany can save €3,000–6,000 per year through property depreciation and deductible expenses — turning tax payments into real equity.
Section 1
How depreciation works (AfA)
German tax law lets you deduct the wear-and-tear of a building over its useful life. This is called Absetzung für Abnutzung (AfA) — and it is one of the most powerful legal tax levers available to private investors.
The basic rule
You can deduct 2% of the building value per year for properties built before 2023 (50 years straight-line). New-builds after 2023 qualify for 3%.
Worked example
That is €1,680 per year in real tax savings from depreciation alone — before accounting for interest and other deductibles.
Section 2
Deductible expenses
Depreciation is only the beginning. A wide range of rental-related expenses also reduces your taxable income. Combined with AfA, these deductions often create a “paper loss” on paper — which offsets your salary income and lowers your total tax bill.
Mortgage interest
The interest portion of your loan repayment is fully deductible.
Property management fees
Costs paid to a Hausverwaltung or property manager.
Maintenance and repairs
Ongoing upkeep, cosmetic renovations, and minor repairs.
Travel to your property
Journeys to inspect or manage the property (at standard mileage rates).
Grundsteuer (property tax)
The annual land tax charged by your municipality.
Depreciation of furnishings
Appliances, fixtures, and fittings can be depreciated separately.
How the “paper loss” works: Even if rent roughly covers your costs, depreciation and interest create a deductible loss on your tax return. This loss is then subtracted from your salary income — so you pay less income tax overall, while the property builds equity for you.
Section 3
Estimate your tax savings
Adjust your salary to see how much you could save with a typical €250,000 investment property.
Tax savings estimator — €250,000 apartment
Annual deductions
At your 42% marginal tax rate
4.620 €
estimated annual tax savings
This is a simplified estimate. Your actual savings depend on property price, loan terms, and your personal tax situation.
See full calculatorSection 4
Is this right for me?
Property investment as a tax strategy works best for people in a specific situation. It is not for everyone — but if you match most of these criteria, it is worth taking seriously.
You are a good candidate if you are
- Permanent employee (or self-employed with stable income)
- Annual gross salary of €60,000 or more
- Planning to stay in Germany for 7+ years
- Looking to build long-term wealth, not a quick flip
Not sure if you qualify?
Take our 2-minute readiness check to find out if property investment fits your situation — no account needed.
Further reading
Want the full deep-dive on the Betongold strategy?
12-year projections, worked examples, and real numbers.