We advise private investors, entrepreneurs with property holdings and international owners of German real estate — in German, English, Russian and Italian.
The fundamental question. In private letting (§ 21 EStG) you pay your personal rate of up to 45 % — but the sale is tax-free after ten years. The asset-managing GmbH, with the extended trade-tax reduction (§ 9 No. 1 GewStG), comes to around 15.8 % ongoing burden, but the sale remains taxable. It typically pays off from the second or third property — and where rents are reinvested rather than consumed. For details on the ten-year rule, see our guide on capital gains on German real estate.
On the sale of private property the ten-year period applies (§ 23 EStG); with owner-occupation in the year of sale and the two preceding years it does not. Anyone selling more than three properties within five years is generally treated as a commercial property trader — with trade tax and loss of the speculation period. Anyone trading actively should not do so within their private assets.
From three to five properties, or where building assets across generations, a real estate holding almost always pays off: risk isolation, a tax-optimised sale of individual properties by share deal (§ 8b KStG) and a prepared handover. The decisive point is that the extended trade-tax reduction is properly maintained over the years.
Foreign owners of German property have limited tax liability (§ 49 EStG); the relevant treaty governs double taxation. For gifts and inheritance, valuation discounts (§ 13d ErbStG) and allowances every ten years apply. Important: let properties generally count as administrative assets and are excluded from the relief (§§ 13a/13b ErbStG) — a benefit is available only in special cases, and planning needs lead time.
In a free initial consultation, we clarify which structure best fits your situation.
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