Quick Answer: On a EUR 400,000 flat with a 20% land share, 2% AfA, EUR 18,000 of gross rent, EUR 3,000 of operating expenses and EUR 5,000 of mortgage interest, sitting on top of EUR 60,000 of other income, the annual tax caused by the letting is EUR 1,411.00. AfA of EUR 6,400 runs on the EUR 320,000 building value only, which cuts the taxable rental result to EUR 3,600, met at a 39.19% marginal rate. Cash flow after tax is EUR 8,589.
Overview
German rental income is ordinary income under Paragraph 21 EStG. It is added to everything else you earn and taxed at the Paragraph 32a tariff, which is why the only honest way to state "tax on the rental" is as a difference: the tariff on your income with the rental result, minus the tariff without it. That is what this calculator does, and it is also how the solidarity surcharge and church tax are computed here.
Two features dominate the arithmetic.
AfA runs on the building only. Grund und Boden never depreciates. The purchase price therefore has to be split between land and building, and only the building share carries depreciation. There is no statutory split, no default, and nothing this calculator could honestly assert. The ratio depends on the local Bodenrichtwert, is property-specific, and is routinely contested with the Finanzamt. So the land share is a required user input. Get it wrong and every number on the page is wrong: on this property, moving the land share from 20% to 30% cuts annual AfA by EUR 800 and raises the taxable result by the same.
The ten-year Spekulationsfrist decides the exit. Sell inside ten years and the entire gain is ordinary income at your marginal rate. Sell at or after ten years and it is tax free. Worse, Paragraph 23 Abs.3 Satz 4 requires the AfA you already claimed to be added back into the gain, so depreciation taken during a short hold is repaid in full on the way out.
How This Is Calculated
Step 1 -- Split the purchase price. Land value is the price multiplied by the land share; the building value is the remainder.
Step 2 -- Select the AfA rate from the completion-date rules of Paragraph 7 Abs.4: 3% for residential completed after 31 December 2022, 2% for residential completed 1925 to 2022, 2.5% for anything completed before 1 January 1925, 3% for commercial and non-residential. The Paragraph 7 Abs.5a election gives an optional degressive 5% instead.
Step 3 -- Compute the annual AfA. For a straight-line rate this is the building value multiplied by the rate, the same every year. For the degressive election it is 5% of the remaining book value, rolled forward year by year, so it falls each year.
Step 4 -- Total the Werbungskosten: operating expenses plus mortgage interest plus AfA. Capital repayment is not deductible; only interest is.
Step 5 -- Compute the rental result as gross rent less total Werbungskosten. A negative result is real and offsets your other income.
Step 6 -- Run the Paragraph 32a tariff twice, on other income alone and on other income plus the rental result, and take the difference. That is the income tax the letting caused.
Step 7 -- Difference the solidarity surcharge the same way.
Step 8 -- Difference the church tax the same way, at 8% in Bayern and Baden-Wuerttemberg and 9% elsewhere, and only where you are a member.
Step 9 -- Sum the three for the total tax on the rental.
Step 10 -- Compute the cash flow after tax as rent less operating expenses less interest less that tax. AfA is excluded here because it is a deduction, not a cash outflow.
Step 11 -- Compute the cumulative AfA claimed up to the year of sale.
Step 12 -- Compute the gain on sale: the sale price less the acquisition cost reduced by that cumulative AfA, less selling costs.
Step 13 -- Test the ten-year period. Inside it, the whole gain is taxable unless it is under the EUR 1,000 Freigrenze. At or beyond ten years, it is tax free.
Step 14 -- Tax the gain by difference against the tariff on other income, because a Paragraph 23 gain is ordinary income and not subject to the Abgeltungsteuer.
Worked Example
EUR 400,000 purchase, 20% land, residential completed 1925 to 2022, EUR 18,000 rent, EUR 3,000 operating expenses, EUR 5,000 interest, EUR 60,000 of other income, single, no church tax, sold at year 8 for EUR 550,000 with EUR 10,000 of selling costs.
Step 1 -- Land value. EUR 400,000 x 20% = EUR 80,000
Step 2 -- Building value, the AfA base. EUR 400,000 - EUR 80,000 = EUR 320,000
Step 3 -- The AfA rate. Residential completed 1925 to 2022, Paragraph 7 Abs.4 Satz 1 Nr.2 Buchst. b: 2.0% per year
Step 4 -- Annual depreciation. EUR 320,000 x 2.0% = EUR 6,400
Step 5 -- Total Werbungskosten. EUR 3,000 + EUR 5,000 + EUR 6,400 = EUR 14,400
Step 6 -- Taxable rental result under Paragraph 21. EUR 18,000 - EUR 14,400 = EUR 3,600
Step 7 -- The tariff without the rental. Paragraph 32a applied to EUR 60,000, single: the baseline
Step 8 -- The tariff with the rental. Paragraph 32a applied to EUR 60,000 + EUR 3,600 = EUR 63,600
Step 9 -- Income tax caused by the rental. The difference between steps 8 and 7: EUR 1,411
Step 10 -- Solidarity surcharge and church tax. Below the Soli threshold and not a church member: EUR 0 and EUR 0
Step 11 -- Total tax on the rental. EUR 1,411 + EUR 0 + EUR 0 = EUR 1,411.00
Step 12 -- The marginal rate the rental actually met. EUR 1,411 / EUR 3,600 = 39.19%
Step 13 -- Cash flow after tax. EUR 18,000 - EUR 3,000 - EUR 5,000 = EUR 10,000 of cash before tax EUR 10,000 - EUR 1,411 = EUR 8,589
Note the gap between EUR 3,600 of taxable result and EUR 10,000 of cash. That EUR 6,400 difference is the AfA: a deduction that costs nothing.
Step 14 -- Cumulative AfA at year 8. EUR 6,400 x 8 = EUR 51,200
Step 15 -- Acquisition cost adjusted under Paragraph 23 Abs.3 Satz 4. EUR 400,000 - EUR 51,200 = EUR 348,800
Step 16 -- Gain on sale. EUR 550,000 - EUR 348,800 - EUR 10,000 = EUR 191,200
Step 17 -- The ten-year test. Eight years is inside the Spekulationsfrist, so the whole gain is taxable: EUR 191,200
Step 18 -- Tax on the gain. The tariff on EUR 60,000 + EUR 191,200 less the tariff on EUR 60,000: EUR 80,135
Two more years of ownership would have made all EUR 191,200 tax free. The calculator reports the years remaining, which here is 2.
What This Does Not Account For
- The land and building split is your figure, not ours. No statutory ratio exists. If the Finanzamt disagrees with your split, every AfA figure and every gain figure on this page changes.
- The Grunderwerbsteuer, notary and Grundbuch costs of acquisition are not added to the AfA base, though in practice the incidental acquisition costs attributable to the building are depreciable alongside it. Enter a purchase price inclusive of those costs if you want them depreciated.
- The degressive Paragraph 7 Abs.5a election is offered but its eligibility is not tested. It requires construction started, or a purchase contract concluded, between 1 October 2023 and 30 September 2029, and residential use.
- Sonder-AfA regimes are absent, including Paragraph 7b for new rental housing and monument or Sanierungsgebiet depreciation under Paragraphs 7h and 7i, which run at much higher rates.
- The own-home exception to the ten-year rule is not exposed here. A property used exclusively as your own home, or as your own home in the year of sale and the two preceding years, is exempt regardless of holding period. This calculator models a let property.
- The three-object rule (gewerblicher Grundstueckshandel) is not tested. Selling three or more properties within five years can recharacterise the whole activity as a trade, bringing Gewerbesteuer with it.
- Vacancy is not modelled. Gross annual rent is taken as received.
- Only church tax varies by state here. The Bundesland input affects nothing else.
- Losses are offset without restriction. A negative rental result is set against other income in full, and no loss-offset limitation is applied.
Common Pitfalls
Depreciating the whole purchase price. Land is never depreciable. On this property that mistake would inflate annual AfA from EUR 6,400 to EUR 8,000 and understate the taxable result by EUR 1,600 every year.
Guessing the land share. It is the single most consequential input on this page and it has no default. Use your local Bodenrichtwert, or the split agreed in the purchase contract, or the Finanzamt's own working aid, and be prepared to defend it.
Deducting the whole mortgage payment. Only the interest is a Werbungskosten. The capital repayment is not deductible and is not a cost.
Selling in year nine. The ten-year clock runs from acquisition to disposal, and both are the notarised contract dates. A sale a few months short of ten years converts a tax-free gain into ordinary income at your top rate. On this property that is EUR 80,135.
Forgetting that AfA is repaid on a short exit. Paragraph 23 Abs.3 Satz 4 adds the claimed depreciation back into the gain. EUR 51,200 of AfA taken over eight years increases the taxable gain by exactly EUR 51,200.
Reading the Freigrenze as an allowance. Paragraph 23 Abs.3 exempts gains of "weniger als 1 000 Euro". At exactly EUR 1,000 the whole gain becomes taxable, not just the excess.
Frequently Asked Questions
What land share should I use?
Which AfA rate applies to my building?
Why is my tax so much lower than my rent?
Does the ten-year rule start from the purchase contract or completion?
What is the marginal rate the rental met?
Can I use a rental loss to reduce my salary tax?
Sources
All read at gesetze-im-internet.de on 2026-08-30. Full quoted provisions in engine/primitives/germany-business-tax.ts section 5.
- Paragraph 7 Abs.4 Satz 1 Nr.1 EStG -- commercial buildings, "jaehrlich 3 Prozent". https://www.gesetze-im-internet.de/estg/__7.html
- Paragraph 7 Abs.4 Satz 1 Nr.2 EStG -- other buildings: "jaehrlich 3 Prozent" if completed after 31.12.2022; "jaehrlich 2 Prozent" if completed 1.1.1925 to 31.12.2022; "jaehrlich 2,5 Prozent" if completed before 1.1.1925.
- Paragraph 7 Abs.5a EStG -- optional degressive AfA at an "unveraenderlichen Prozentsatz in Hoehe von 5 Prozent vom jeweiligen Buchwert" for residential construction started or contracted between 1.10.2023 and 30.9.2029.
- Paragraph 23 Abs.1 Nr.1 EStG -- private sale taxable where "der Zeitraum zwischen Anschaffung und Veraeusserung nicht mehr als zehn Jahre betraegt", with the own-home exception. https://www.gesetze-im-internet.de/estg/__23.html
- Paragraph 23 Abs.3 EStG -- the Freigrenze of "weniger als 1 000 Euro", and Satz 4 requiring AfA already claimed to be added back into the gain.
- Paragraph 21 EStG -- income from Vermietung und Verpachtung. Paragraph 9 EStG -- Werbungskosten. Paragraph 32a EStG -- the income tax tariff applied here by difference.
There is no statutory land and building split in any of these provisions, which is why this calculator takes it as an input rather than asserting one.