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 income tax rate of up to 45 % — but the sale is tax-free after ten years. An asset-managing GmbH, with the extended trade-tax deduction (§ 9 No. 1 GewStG), comes to roughly 15.8 % on ongoing rental income, but the sale remains taxable. It typically pays off from the second or third property — and when rents are reinvested rather than spent.
When selling privately held property, the ten-year period applies (§ 23 EStG); it falls away if you use the property yourself in the year of sale and the two preceding years. 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. If you trade actively, don’t hold it in private assets.
From three to five properties, or where wealth is built across generations, a real-estate holding almost always pays off: risk isolation, tax-efficient sale of individual properties via share deal (§ 8b KStG) and a prepared handover. The key is keeping the extended trade-tax deduction cleanly met over the years.
Foreign owners of German property have limited tax liability (§ 49 EStG); double taxation is governed by the relevant treaty. Gifts and inheritance benefit from valuation discounts (§ 13d ErbStG) and allowances every ten years. Important: let property generally counts as administrative assets and is excluded from the relief under §§ 13a/13b ErbStG — a benefit applies only in special cases, and structuring needs lead time.
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